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Registered: ‎03-06-2010
Re: Conventional mortgage: Which gross wage is used?

JM-AM wrote:

Salaried employees usually only have to furnish copies of pay stubs for last 30-60 days. They will still do am income verification with employer but it should match your paystubs wages not your w2 wages after deductions. 


The above is correct. However, the lender will still want a copy of your tax return.

 

I don't know where you are located (geographically) but here in Fl most of the lenders still require your tax returns for the two years leading up to mortgage approval even if you are salaried. It may be lender specific (but I don't think so), but all the lenders I work with require the returns at some point early in the process (including a signature of the 4506T) to order the tax transcripts. This is the way that they verify the income you are claiming on your taxes matches your salary and is not reduced by business expenses. Or that the income you are claiming after business expenses is enough to make the mortgage payments with the appropriate ratios.  Yes, it is unusual that a salaried employee would deduct business expenses on their tax returns, but apparently enough people do it that it is SOP now to check the tax returns.

 

When we had the height of the real estate market in the mid-2000's tax returns were not necessarily required (NINA loans) but they have been over the past several years since the mortgage meltdown.