No Tax Return Mortgage Options for 2020
Can You Get a Mortgage with No Tax Returns?
Most people assume that you cannot get a mortgage unless you provide your tax returns for the last two years. However, there are mortgage options for people who cannot provide tax returns or if your tax returns do not show enough income to qualify for a mortgage.
The lenders who offer mortgages without providing tax returns typically design these loan programs for self-employed individuals. In most instances, they have a lot of business deductions lowering their net income to the point where the tax returns show very little income or even a loss.
Lenders who offer mortgages with no tax return requirement understand that the net income on your tax returns is not as important as the amount of money that you are bringing in each month. As a result, they are instead asking to see 12-24 months bank statements. It is a great way to finance your dream home without having to provide tax returns.
Contact us to find out more about your options or to get an idea what your rate would be. If you can just quickly complete the form to the right or at the bottom of your screen if you are reading this on a mobile device. We will get back to you right away.
Can you get a mortgage with no tax returns? There are lenders who have loan programs for individuals who cannot provide tax returns. They are designed for self employed borrowers who have not filed returns or show a very low net income.
No Tax Return Mortgage Requirements
You must be self-employed – The no tax return lender will need to verify this either with a business listing, a business license, a letter from your accountant, your website, etc. They may require one or more of these to prove that you are in business. 1099 borrowers can qualify as well.
Down Payment – Some no tax return mortgage lenders require as little as 10% down but it all depends upon your unique scenario. Other factors will impact your down payment such as credit score, assets, and more.
Credit Scores – There are no specific credit score requirements, but your down payment requirement may increase, and it is possible that your rate will as well. Let us help you to figure all of this out without having to run your credit.
No Tax Return Requirements – Most of our lenders require you to supply 12-24 months’ worth of bank statements to use as income verification. They will use the average monthly deposits and will treat them as income. They will typically use 100% of the deposits from your personal bank accounts and a portion of your business accounts.
Other Assets – It is important to list as many assets as possible to help with the approval of your mortgage application. Underwriters always look at compensating factors and assets is one of them.
Property Types – Single family up to 4 units, second home and investment properties.
No Tax Return Mortgage Rates
One of the first questions people ask when speaking to a lender is what are the rates. We just explained that not all lenders offer mortgage programs that do not require tax returns. There is risk involved for the lender when the borrower cannot provide all of the standard and customary documentation.
Due to the increased risk, the rates for mortgages that do not require tax returns will be slightly higher than what you can expect from a conventional loan. Each lender will likely quote the rate differently but the two main factors will be your credit score and your down payment amount.
No Tax Return Mortgage Pros and Cons
- no tax returns needed to prove income
- The down payment requirement is reasonable.
- The interest rates are competitive.
- Debt to income ratios of up to 50% allowed.
- No prepayment penalties
- You need to have a legitimate business and can prove it.
- The rates are slightly higher than what you would get with a conventional mortgage.
- The down payment requirement could increase of other factors such as credit score are not good.
- Not all lenders offer this program
No Tax Return Mortgage Frequently Asked Questions – FAQ
Can you get a mortgage with no tax returns?
Yes, there are programs available which do not require tax returns. However, they are not offered by many lenders. Let us help you to find the right lender for your scenario.
Do mortgage companies verify tax returns?
Most lenders do require you to provide tax returns for conventional loans. They will require you provide all pages from the past two years plus IRS form 4506 T which can be downloaded from the IRS website. However, there are a handful of lenders who have programs where tax returns are not required.
How many years of tax returns are required to buy a house?
Usually lenders will require that you provide your last two years tax returns and also your W2’s. An exception can be made if you recently graduated college and only have 1 year of tax returns.
Which lenders offer mortgages with no tax returns required?
Your traditional lender that uses a Fannie Mae underwriting system will require that you provide 2 years tax returns. However, portfolio lenders who underwrite the loans themselves or who use the Freddie Mac underwriting system will be able to help you with your loan. A portfolio lender will keep your mortgage in their “portfolio” rather than sell the mortgages as investments to others. This allows them to be more flexible on the guidelines.
Do no tax return mortgage lenders require higher credit scores?
Although many lenders have minimum credit score requirements that may be higher than others, some of the lenders will allow for credit scores into the 500’s.
Can I get a cash out refinance without providing tax returns?
Yes, these loan programs are available for purchase, refinance and cash out refinance scenarios.
Do I need to provide tax returns for an FHA loan?
Yes, if you are trying to get an FHA loan then you will need your last two years’ tax returns. The FHA guidelines do not allow you to qualify using only your bank statements.
Is there a pre-payment penalty for a no tax return mortgage?
No, you should not see a pre-payment penalty with this type of mortgage.
What is a bank statement loan?
A bank statement loan is where you provide 12-24 months bank statements and the lender uses your average monthly deposits to qualify you for your mortgage.
We are able to help you to find a no tax return mortgage lender in the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.