FIRST TIME BUYER - DO YOU THINK I CAN GET THE MORTGAGE?

[jorantes]

I am looking at purchasing my first home, but I have some unusual circumstances.

25 years old & single

Home Price is $328k

FHA Loan / 3.5% down (which I have)

Same Employer for 6 years / 75k+ salary income

700 FICO score

all credit cards & LOC have been paid below 10%

18 accounts total / 4 open / 6 yrs credit history 

highest loan ever was $48k auto loan (which I traded for less expensive car so I can improve my ratios)

currently $250 car payment

I have been working for the same employer for the last 6 years. The thing is over the last couple years my paycheck has been received in various ways. My employer has jumped between a few payroll companies, so sometimes I was a W2 employee - sometimes a 1099 employee and many times just received a company check. I never asked questions, as long as my check was there every week. Long story short - (being stupid) I only reported very little of my income. So now I want to buy a house and was told upfront before applying that the lender will pull my IRS transcripts via 4506-t form. I have been told that I need to amend my returns for the last 2 years and pay whatever taxes are owed including penalties. Once this is done should I be approved? And approx how long does it take to process my amended returns once they are mailed?

Hopefully someone can shed some light on my situation - anything I should look out for or be concerned about?

Thanks!

Message Edited by jorantes on 08-10-2009 05:24 PM

[Anonymous]

I am curious too as to the responses that you will receive as I am clueless.  My only thoughts are::

If you start trying to pay back-taxes for the previous 2 years, isn't it possible the IRS might investigate further and try to recoup what is actually owed since you began working for the company?  Though better to get it all taken care of, can you handle it and how long of a process would it be? Also, I am assuming this year you will be showing all income and hopefully have your pay stubs for at least 6 months?  I'm also wondering if your boss might write a letter stating dates of employment, current salary, and an expectation that your income will not be decreased in the near future.

good luck!!!

[ShanetheMortgageMan]

A lot of lenders are requiring that your tax returns can be verified via the 4506t process.  If the tax returns you provide to them are not the ones that are verified via the 4506t process then the lender may require that they can verify your correct tax returns before they'd be able to issue the final approval.  From the time you file in person, it can take 6-8 weeks for the 4506t request to come up with the amended tax return.  Filing electronically can speed that process up by a couple weeks.

However if you need to buy a home prior to the IRS processing your returns, I suggest you go down and file at your local IRS office in person.  Have the IRS clerk stamp your returns as an official copy, have the IRS also stamp your payment checks to them as rec'd, once the checks have been cashed get copies of the cancelled checks from your bank, and also be prepared with a bank statement showing the checks being cashed as well.  If the lender makes exceptions to the 4506t results, those documents should do the trick. 

[myfairlady]

This is very helpful information as I am in the process of getting a loan and I amended my last years tax return and the LO told me the loan was dead because when they pulled the 4506t it came back with the original filing information as the amended return takes approx 6 weeks to update.  The LO also said he was told I would have to wait 6 months to reapply for a FHA loan until the IRS updates my tax returns, which I don't believe is true.  I will go down to my local office and have my taxes amended and stamped as you said and make any payment I owe.