W2 Only No Tax Return Mortgage Loans

W2 Only No Tax Return Mortgage Loans

W2 Only No Tax Return Mortgage Loans are available for homebuyers on FHA, VA, and conventional mortgages. No income tax returns need to be provided. You do not even have to provide any income tax returns to the lender. The mortgage underwriter will calculate your income just go off your reported W-2 income only income by your employer.

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Can I Qualify For A Mortgage Without Tax Returns?

Are you unable to qualify for a home loan because of tax returns?
Are you unable to qualify for a home loan because of tax returns? If you are a W2 wage earner, you may be able to qualify for a home loan without providing tax returns. Usually, when you apply for a mortgage, mortgage underwriters require tax returns of two years, W2s of two years, or/and 1099 of two years. In some scenarios, there is a way to get a mortgage without 2 years of job history.

Traditional Income Documents Required By Lenders Versus W2 only No Tax Return Mortgage Loans

In general, the traditional way mortgage underwriters calculate qualified income is to use two years of adjusted gross income after unreimbursed expenses off your income tax returns. Traditional calculations of income to be used as qualified income is to comb income tax returns and look at write-offs and take the net adjusted gross income of the past two years.

Unreimbursed Business Expenses Hurdle To Meet Debt To Income Ratio Requirements

Taxpayers with substantial unreimbursed business expenses may not qualify for a mortgage. However, with W-2 income only no tax return mortgage loans, unreimbursed business expenses are not an issue due to no income tax returns requirement.  Write-offs are factored in to determine whether you meet the required DTI (debt-to-income) ratio to qualify for the mortgage if tax returns are required. With the W2 only no tax return mortgage loans, W2 wage earners aren’t required to provide their income tax returns to qualify for the mortgage.

Can I Qualify for a Home Loan With No Income Tax Returns?
Can I Get a Home Loan If I Don't Have Any Tax Returns?

W2 mortgage borrowers who tend to write off many expenses on their tax returns find it hard to qualify for a mortgage because the expenses they have written off on their tax returns effects their W2 income. Due to excessive write-offs, it becomes hard for W2 wage earners to qualify for a home loan. These borrowers can qualify for a special loan program called the W2 only no tax returns mortgage loan. With W2 only no tax return mortgage loans, borrowers can qualify for FHA home loans, conventional loans, and VA loans without providing income tax returns.

Can I Buy A House With W2 Only No Tax Return Mortgage Loans?

The conditions of W2 only no tax returns make it easy for W2 wage earners to qualify for a mortgage. W2 borrowers don’t have to provide tax transcripts for FHA home loans, conventional loans, and VA loans if an automated underwriting system doesn’t require it. This rule is, however, only for W-2 employees and doesn’t apply to self-employed borrowers. The borrowers who acquire rental income from several rental properties are also not eligible for W2 Only No Tax Return loans.

Benefits of Buying A House With W2 Only No Tax Return Mortgage Loans

The advantage of W2 only no tax return mortgage loans is that W2 mortgage borrowers who wish to purchase a house, don’t have to provide their tax returns that show losses because of unreimbursed expenses. Those borrowers who are required to buy their own uniforms for work have unreimbursed worker expenses on their tax returns.

Wage Earners Ideal For W2 Only No Tax Return Mortgage Loans
 W2 Only No Tax Return Mortgage Loans are ideal for wage earners.

Examples of these kinds of employees include firefighters, tradesmen, police officers, mechanics, doctors, nurses, pharmacists, dentists, and truck drivers. Borrowers who have to purchase equipment and tools for their work also have unreimbursed expenses. For example, mechanics are required to purchase equipment and tools for mechanical work, electricians and plumbers are required to purchase equipment and tools and police officers are required to purchase guns, ammo, and safety gear.

Homebuyers Who Have Not Filed Tax Returns Can Qualify For A Mortgage

With W2 only no tax return mortgage loans, these mortgage borrowers don’t have to provide their tax returns to qualify for a home loan. Borrowers can qualify for a mortgage even if they haven’t filed their taxes. Mortgage underwriters will only require their W2 income slips.

Mortgage Borrowers Who Are Self Employed

If a mortgage borrower is a W2 wage earner, then they won’t have to provide income tax returns if the automated underwriting system doesn’t require it.
If a mortgage borrower is a W2 wage earner, then they won’t have to provide income tax returns if the automated underwriting system doesn’t require it. However, if a mortgage applicant is a self-employed borrower, then the only way a mortgage lender can determine their income is by examining their tax returns. The tax returns of a self-employed borrower will show to the mortgage underwriter how much money they earn. In some cases, mortgage borrowers can get away with just providing income tax returns of one year such as if they change from being a W2 wage earner to a self employed borrower.

Can Self-Employed and 1099 Wage Earners Qualify For No Tax Returns Mortgages?

W2 only, no tax returns mortgage is not favorable for self-employed borrowers. Self-employed borrowers who run their own business or are 1099 wage earners must provide tax returns of 2 years and 1099 income of two years to qualify for a home loan. Lenders won’t accept their loan application if these documents are not provided. Tax returns are required by the mortgage lenders because many expenses are written off by self-employed mortgage borrowers on their returns.

How Mortgage Underwriters Calculate Income For Self-Employed and 1099 Wage Earners?
How Do Mortgage Underwriters Determine Self-Employed and 1099 Wage Earners' Income?

For calculating income of self-employed borrowers, mortgage underwriters use adjusted gross income. A 2 years average of the gross income is taken. However, mortgage underwriters only average the income of 2 years if the gross income is higher or the same in the recent year. If it is low in the recent year, mortgage underwriters will use the lower adjusted gross income. If the income of a self employed borrower has been continuously declining and the mortgage underwriter finds that it will likely decline in the future, then he/she will not use this income.

Bank Statement Loans for Self-Employed Borrowers

In this case the mortgage borrower would have to get a co-borrower or he/she can use the bank statement mortgage loans for self-employed borrowers. The bank statement mortgage program doesn’t require income tax returns. Self employed borrowers can qualify for a bank statement mortgage program by providing bank statement (personal or business). A minimum credit score of 620 is required to qualify for the bank statement mortgage program.

Types of Bank Statement Loan Programs

There are four loan options available for self-employed borrowers in the bank statement mortgage program. They can provide their most recent personal bank statement of 12 months, they can provide bank statements (business or personal) of the last 24 months, they can provide bank statement of last six months or they can provide bank statements of last one month. However, if self-employed borrowers want to provide bank statements of six months or one month, their minimum credit score should be 720.

Mortgage Borrowers Who Are 1099 Wage Earners
1099 Wage Earners as Mortgage Borrowers

When 1099 wage earners like realtors or salesman apply for a mortgage, they must provide tax returns of two years and 1099’s of two years. Mortgage underwriters require tax returns to determine how much has been written off by 1099 wage earners on their income tax returns. Mortgage underwriters calculate the income of 1099 wage earners with gross adjusted income from 1099’s. If the 1099’s wage of 24 months is similar, then mortgage underwriters take the average of two years for calculating the income. However, if the income of the borrower is found to be declining, mortgage underwriters will use the recent lower income.

Leniency with W2 Wage Earners

W2 wage earners who apply for a W2 only no tax returns mortgage must provide pay slips of the last 30 days and verification of employment from the employer.  W-2sof two years is also required, but the requirements of W2 Only No Tax Return loan are lenient for W2 wage earners.

Types of W-2 Income Wage Earners

For example, if a W2 wage earner has been employed in a company as a part time worker for the last two years and later got promoted to a status of a full time employee then when the mortgage underwriters are qualifying him/her for the home loan, they will use the income of the full time status.

How Are Income Increase and Job Promotions Looked at by Mortgage Underwriters

If a W2 wage earner has been employed in the same company and his/her pay increased because of a promotion, then the mortgage underwriters will use the increased pay for calculating the income of the mortgage borrower.
If a W2 wage earner has been employed in the same company and his/her pay increased because of a promotion, then the mortgage underwriters will use the increased pay for calculating the income of the mortgage borrower. If a W2 wage earner mortgage applicant switched jobs and a higher pay was offered at the new office, then the pay of the new job will be used for calculating income and the mortgage applicant will have a greater chance of qualifying for a home loan.

Qualifying For A Mortgage With Gaps In Employment

If a W2 mortgage applicant had employment gaps they can still qualify for a W2 only no tax returns mortgage provided that they get employed again within a period of six months. The employment gap should not be more than six months if W2 wage earners want to qualify for a home loan with no additional requirements. However, if the employment gap was greater than 6 months, then the W2 wage earners will have to stay employed for six months and work to qualify through the new job’s pay.

W2 Wage Earners Can Use Overtime Income
Mortgage Loans Bottom Line W2 Only No Tax Return

Another advantage of W2 only mortgage is that W2 wage earners can use overtime income as additional income to qualify for the mortgage. However, there is one important condition that they must meet in this case. The condition is that the mortgage borrower must prove that overtime income is being given to them consistently for the last two years. W2 wage earners can also use the bonus income as additional income to qualify for the W2 only no tax returns mortgage. However, the same condition applies here too and the borrower must prove that bonus income is being given to them for the last two years. W-2 wage earners can also use child support and alimony income. However, this income can only be used if the borrower is expected to receive child support and alimony income for three more years.

Qualifying for Mortgage

W2 wage earners who want to buy a new home can qualify for the W2 only no tax return mortgage loans on FHA home loans, conventional loans, and VA loans.  W2 only no tax returns mortgage gives W2 borrowers who have many unreimbursed expenses a chance to qualify for a home loan. However, there are certain rules and a few restrictions on how W2 borrowers can qualify for a mortgage. For example, borrowers cannot qualify for the W2 only no tax returns mortgage if they run a self-employed business (full-time). W2 wage earners cannot qualify for the W2 only no tax returns mortgage if more than 25 percent of their income is self-employment income. Borrowers with rental income are also ineligible for the W2 only no tax returns mortgage.
In order to qualify for W2 only mortgage, borrowers must be W2 wage earners. As long as a mortgage is a full-time W2 wage earner, he/she won’t have to provide tax returns to the mortgage underwriters to qualify for the home loan. The borrower will be required to provide W2s of two years so that mortgage underwriters can determine his/her income. The borrower cannot have both 1099 wages and W2 wages. The mortgage applicant who has W2 income, 1099 income and rental properties income will have to provide tax returns to qualify for the mortgage. The following things can trigger the need for income tax returns of the past two years even if a mortgage applicant is a W2 wage earner:

  • Income from pension
  • Income from rental properties
  • Partnership in a business
  • Social security income

If a W2 mortgage applicant wants to qualify for W2 only no tax returns, he/she should make sure that his/her only source of income is the W2. If that is not the case, then the mortgage borrower will have to provide tax returns of the past two years and tax returns will be used to calculate the overall income of the mortgage borrower.

W2 Only No Tax Return Mortgage Loans Bottom Line

The W2 only no tax returns is an ideal program for W2 wage earners who find it hard to qualify for a home loan because of unreimbursed expenses. With the help of W2 only no tax returns mortgage, W2 wage earners can qualify for FHA loans, conventional loans, and VA home loans.

W2 Only No Tax Return Mortgage Loans Offered with FHA, VA, Conventional Loans

W2 only no tax returns are only beneficial for full time W2 wage earners and those W2 wage earners who have other sources of income cannot benefit from it. The reason is that if W2 wage earners have other sources of income like 1099 or rental properties, they will have to provide income tax returns of the past two years. Therefore, only full-time W2 wage earners should approach mortgage lenders for the W2 only no tax returns mortgage.

Mortgage Lenders Experts In W2 Only No Tax Return Mortgage Loans

If you have been denied a home loan or have any questions about real estate or mortgage please contact Loan Consultants at 844-275-2007. Just give us a call or text and we will be happy to assist you.

Mortgage With W2 Income: Is It Possible?
W2 Income Mortgage: W2 and Freddie Mac DTI

If you are backed up against the wall and have non-traditional income, we have a definite option for you to get a mortgage approval without Tax Returns or a written Verification of Employment (VOE) used to calculate your approval.  Here at Loan Consultants, we have many creative financing options and one that can be used here is qualification using on W2 income only.  Using this financing option we can qualify borrowers only using their W2 income without showing their tax returns if they have a high amount of expenses written off.  The only caveat with this type of calculation is that the borrower cannot be using 1099 income or have received 1099 for income earned in the past 2 years.  All we care about is properly recorded W2 income over the last 2 years.  In this article I am going to go through the case scenario of how we took in a borrower that got declined from 2 previous lenders but got a loan commitment from us over the course of a weekend.

Mortgage With W2 Income: Case Scenario

In an effort to keep the identity of the individual anonymous, we will refer to our borrower as Brian and we are going to walk through his denials, to his approval, and finally ending with a firm loan commitment for a Mortgage With W2 Income.  Brian was in the process of purchasing a new construction home and was going through the preferred lender of the builder.  After weeks of trying to get a preapproval for Brian, he was ultimately met with a road block as this lender was not going to get him approved and they really didn’t disclose why this was.  With minimal time to waste, Brian moved on to a referral lender and initially had a pre qualification from them.  However, upon going through Brian’s documentation, he was not issued a pre-approval and was told they were not going to be able to finance him a home with his current debt to income ratio.  What was Brian to do?  His house was built, he has a new baby, and a wife to take care of.  That is where Loan Consultants stepped in to make things right…

Loan Consultants To The Rescue

It was a Friday night and the phone rings.  It appears that Brian has gotten in contact with Loan Consultants.  As we don’t work your standard 9-5 hours, we are available 24-7-365 and will always be there to help you.  Upon getting the phone call from Brian and some basic information, we knew that we could help this man and were focused on putting him into his dream home and making this nightmare end.  Between Friday night and Saturday Brian submitted all the documentation he had previously used with other lenders.  Working all day Saturday and Sunday, we crunched the numbers to make sure we could get Brian approved for the mortgage he so greatly desired.  We were close, but we just couldn’t pass our debt to income ratio to get a Fannie Mae approve eligible.  

Mortgage With W2 Income: W2 and Freddie Mac DTI

How were we going to get Brian approved with a 50.8% debt to income ratio when Fannie Mae required us to get below a 45% debt to income ratio.  After much back and forth and looking for all possible options, the light bulb went off and we got 2 ideas.  Our first option was to try and get Brian approved using LP and Freddie Mac where under certain circumstances you can get approved with a 49.99% debt to income ratio.  This would be great for us but we still needed a little bit more to reduce his debt to income ratio.  That’s It!!!  We can try to get a Mortgage With W2 Income.  Under this option we can take his previous year’s W2 income and average it out over a monthly basis to get us an updated gross income basis for calculations.  We crunched the numbers and when we updated Brian’s income we were left with a 49.6% debt to income ratio and an APPROVAL.  We double checked our numbers to ensure we got everything calculated properly, and sure enough we did!  

Mortgage With W2 Income: Conclusion

As you can see, we took a loan denial and flipped it into an approval by thinking outside the box and utilizing a Freddie Mac program for a Mortgage With W2 Income only.  Brian had not heard about this option from his two previous lenders and he was grateful that we had taken his puzzle and solved it.  What started out as a longshot now has Brian with a Mortgage With W2 Income and he will be closing on his loan shortly.  Here with Loan Consultants, at www.loanconsultants.org, we do what it takes and go above and beyond to make sure we do everything we can to get you the loan you deserve.  Just take Brian’s example and think twice before you go anywhere else.  We will get you approved when all others say “No.”

FHA W-2 Only Mortgage Loan: Great Opportunity
FHA W-2 Only Mortgage Loan: Excellent Chance

As we have discussed in the past and a common theme amongst loan products is that FHA Loans are by far the most popular loan program offered due to the easier requirements to get approved for compared to their Conventional Loan counterparts.  The one myth about FHA Loans is that they are for first-time home buyers or individuals with bad or damaged credit.  This is just not the case as plenty of people with solid credit scores and debt to income ratios are finding themselves using FHA Loans as well.  As you probably know by now with a minimum 620 FICO, you can obtain an FHA Loan with 3.5% down and can have a whopping 56.9% debt to income ratio.  Another positive is there isn’t a limit on non-occupant co-borrowers just as long as these co-borrowers are related to the borrower by blood, marriage, or law.  For the normal individual looking for a loan what they have probably done is file taxes in an effort to pay the least amount of tax or obtain the largest tax return possible.  This is good in the short-term, however, when it comes to mortgage qualification these large deductions can hurt your qualifying income leaving you with the ability to afford a lot less home than what was imagined.  FHA has a program that solves this and it is the FHA W-2 Only Mortgage Loan and it is offered right here at Loan Consultants.  With the FHA W-2 Only Mortgage Loan borrowers can go through the mortgage qualification process without having to share or have tax returns scrutinized in any way.

FHA W-2 Only Mortgage Loan: Requirements

If you are looking to qualify for the FHA W-2 Only Mortgage Loan you must abide by the following requirements:

  • You must have been employed by the same employer for the past 2 years
  • You don’t just need to be a salaried employee as you can also make hourly wages as well
  • Documents: Paystubs (30 days), 2 years W-2s
  • Ensure that tax returns are under no circumstances submitted for the FHA W-2 Only Mortgage Loan
  • Borrower may get disqualified from the FHA W-2 Only Mortgage Loan if more than 25% of their income was commission based
  • Non-occupant co-borrowers for the FHA W-2 Only Mortgage Loan are prohibited
  • Must receive an Approve/Eligible to qualify and a Manual Underwrite is not eligible for this program.

FHA W-2 Only Mortgage Loan: Ineligible Borrowers

If you were thinking that the FHA W-2 Only Mortgage Loan was for everyone, then you might be mistaken as the following situations and examples will deem borrowers ineligible for this program.

  • Self-Employed Borrowers
  • 25% or greater commission income on their W-2
  • Borrowers who have earned income from a foreign entity and paid via foreign currency
  • Borrowers who are employed by family members
  • Borrowers who receive dividends, interest income, and capital gains
  • Income reported via IRS Form 4137 that was not reported by their employer on their W2

FHA W-2 Only Mortgage Loan: Call Today

If you feel you are a good fit for the FHA W-2 Only Mortgage Loan, you need to call today as Loan Consultants offers this loan program as well as many other QM and Non-QM Products.  We will have a product for every situation out there and we will get your loan done.  If you’d like to reach out you can call or text me at any time via 888-900-1020.   We are available 7 days a week, nights, weekends, and holidays to better serve each and every one of our clients.

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