cancel
Showing results for 
Search instead for 
Did you mean: 

Conventional Mortgage Loans and Tax Returns / W-2s

Highlighted
Valued Member

Conventional Mortgage Loans and Tax Returns / W-2s

How common is it for tax returns being required for w-2 earners on a conventional loan? A few of years ago, my spouse got the idea to start a side gig with horses and cattle. There were a lot of expensive start up costs with no income. We were advised by an accountant to no longer operate the business due to the losses with no sure signs of profit generation in the future and to claim all of our outstanding items on our taxes and move on. We agreed and immediately quit operating the business in December 2019 but the losses we claimed on our 2018/2019 tax return reduced our Adjusted Gross Income by quite a bit to where we may not hit our DTI% requirements for a mortgage.

 

I know the last time we built and went VA we were required to produce W2s paystubs and tax returns butt hat was 6 years ago and I know theres been some changes in whats accepted and convential is a bit different.

 

Our current income is reflected on our W-2s and on our paystubs but our tax returns arent telling our current story (although I know history matters, our w-2 income has been consistent and growing by 3-5% each year) I'm just hoping an underwriter will take a Letter of Explanation stating what the loss was for and that it ended in 2019. I'm afraid that we will get through preapprovals with no issues but then be asked by the Underwriter for our tax statements, AFTER we start working with a builder.  We haven't started the loan process yet but I just sent the loan officer who will be working our loan (she is agood friend and she did our current mortgage and is the VP of the mortgage company so I trust her 1000%) an email to check with the underwriter what they think before we start making any moves. I just hoped to start building this  fall but we may have to wait until February after I file 2020 taxes Smiley Sad 

 

 

 

 

Message 1 of 5
4 REPLIES 4
Highlighted
Valued Contributor

Re: Conventional Mortgage Loans and Tax Returns / W-2s

Disclaimer: I am not a mortgage professional 

 

99.9% sure you have to provide tax returns for a conventional conforming mortgage 

 

I am 75% sure if you can show you are no longer in business the lender should use your pay stub income 

Scores hover around 800
Haven't been AZEO in over a year
Rome was not built in a day, neither is a good credit profile
Message 2 of 5
Highlighted
Frequent Contributor

Re: Conventional Mortgage Loans and Tax Returns / W-2s

You have to ask the loan officer. All of this depends on the lender.

Message 3 of 5
Highlighted
Valued Member

Re: Conventional Mortgage Loans and Tax Returns / W-2s


@dragontears wrote:

Disclaimer: I am not a mortgage professional 

 

99.9% sure you have to provide tax returns for a conventional conforming mortgage 

 

I am 75% sure if you can show you are no longer in business the lender should use your pay stub income 


This is what I'm hoping for! I dont have a problem disclosing any of it I just want it to be understood that we are no longer operating that business and when we apply this summer/fall, it would be almost 9 months that we ended the business. I just don't want our loan to be haulted for something disclosed up front or to be told we dont need them then do and this pose an issue - this is why I emailed our LO before we even get started on the process. 

Message 4 of 5
Highlighted
Valued Member

Re: Conventional Mortgage Loans and Tax Returns / W-2s


@Mortgage-Specialist wrote:

You have to ask the loan officer. All of this depends on the lender.


Fingers crossed that they dont need them or that my explanaion will suffice if they do! 

Message 5 of 5
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.