Loan Qualification

s99711 · Joined: 01 Aug 2008 Posts: 4 2.80 Dollars($)

I am in the process of being approved for a home loan when suddenly the lender states due to the deductions on my income tax for the last two years my qualification status has changed. From what I understand the deductions lowered the amount I qualify for. How is this possible?

ckalvesmaki · Posted: Fri Aug 01, 2008 7:49 am Post subject:

Are you self employed?

Guest 0.10 Dollars($)

No I am not self employed

ckalvesmaki · Posted: Fri Aug 01, 2008 12:04 pm Post subject:

What kind of deductions did you have? Normally the only time we see something like this happen is when the borrower is self employed. What type of loan are you tring to get? You should seek a second opinion from another broker or lender.

gmakerley · Posted: Sat Aug 02, 2008 4:48 am Post subject:

perhaps you've written off non-reimbursed business expenses, such as mileage or cell phone usage or uniforms, or things of that nature. the typical treatment for those sorts of deductions is to reduce your gross income by that amount. doing so will definitely affect how you qualify.

Guest 0.10 Dollars($)

Hmm, this is interesting to me because I have just begun the process of becoming prequalified and looking for a home and was told that it is rare for the lender to ask for tax returns. I am not self-employed and was told that I would only need to present my W-2s... So how likely is it that I will be asked to present my returns? (I am applying for a FHA loan).

Caron

Hi handyman,

Welcome to our forums.

Usually if one is not self-employed, the lender will not likely check the tax returns for the past 2 years. Chances are less actually. Mostly the W-2 forms and paycheck stubs help the lender compare the income information on the application form along with what is mentioned in the paycheck stubs and W-2 forms.

However, when it comes to self-employed borrowers, lenders ask them to sign Form 4506 along with the date so that it can help them get the permission to pull old tax returns and compare what you filed with the income information you've provided in the loan application form.

So, I don't see why your tax returns should be pulled out by the lenders.

Good luck

gmakerley · Posted: Mon Aug 04, 2008 8:59 am Post subject:

you are correct, handyman, in thinking that you'll be able to avoid having tax returns requested. in any event, though, your returns would likely only reflect what your W2s reflect, so no matter anyhow.

you should have clear sailing with pay stubs and W2s for documentation.

Jason1 · Posted: Mon Aug 04, 2008 11:06 pm Post subject:

The underwriting may require full taxes for other reasons than self employment, such as the borrower owning rental properties or other passive income. Have you been given a reason for the request of your complete taxes? What deductions are creating the problem?

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