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I am applying for a FHA loan. Have 650 score, absolutely no debt, nearly 6 figure income, no late-payments, and the home that I want to put an offer on is likely to be had for around 150k. Have had this job for 1 yr, 11 months and prior to that was self employed (not reported income, worked for my father-n-law and in turn was given a home and living expenses). I have been told that I will need to present my last 2 W-2s, so the oldest of the two tax years will only show income for a few months rather than my newest W-2. So, my income will not look stable, right?

As far as the tax return aspect, I have filed an extension this year for 2007 so if I am asked to present that I will have to file prior to progressing any further thru the approval process. That is why I am asking how likely someone thinks it will be that I am asked to show these.

Comments? Advice?

kpatrick · Posted: Sun Aug 03, 2008 7:47 am Post subject:

Hi Guest,

Although you will be turning in your last 2 years w-2's, your lender will also be getting a verification of employment from your employer which will show you YTD income, as well as your YTD income on your paystub). There should be no reason that the Underwriter asks for the tax returns, unless the job you are in normally allow you to write off expenses (ex salesperson, or someone whom works on commission, or is 1099'd vs w-2'd).

So long story short, no, you will not look unstable.

I would recommend that you go ahead and start the process and get your loan package submitted, for that is the only true way you will know for sure, but in a worst case scenario, you are only 1 month away from having 2 years history with your current employer. SO as long as you work with a direct lender that has easy access and good working relationship with their UW's, then you should be fine.

Once you get your "Approval", vs your "Pre-appproval", you can move forward with confidence. Worst thing you will probably hear is "you need one more month".

Good luck!

Kim

Caron · Posted: Mon Aug 04, 2008 3:07 am Post subject: RE: tax returns for mortgage

Hi guest,

Congratulations on finding a home of your own!

Since you are looking for an FHA loan, a 650 score seems to be ok right at the moment. It's good that you have no debts as such - perhaps you'll find it easier to pay for the mortgage. Your income figure looks good and it's great that you don't have late pays - in short none of the things that can tarnish your credit. But shouldn't your score be something above 650 given that you don't have any lates etc? or do you have any negative items on your credit report?

I don't think you'll be asked for tax returns for the FHA or any other loan if you've been working under an employer for the last 1 year and 11 months. And as Kim said, the lender can maximum ask you to wait for a month so that you complete 2 years in your job. Mostly 2 years of W-2 forms are asked for by lenders. So, that's the reason he may ask you to wait for a month. And no, your income won't be considered as unstable.

I've discussed on a similar query on whether lenders ask for tax returns . Please have a look and if you have further queries, feel free to ask.

Good luck for your new home Smile

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How likely is it that I will be asked to show tax returns?