Contrary to popular belief, getting a mortgage without tax returns is possible for self-employed borrowers and non-business owners alike. In this post I cover everything you need to know about getting a mortgage without providing tax returns.

Can you get a mortgage without tax returns?

Yes. There are many instances and different loan products that do NOT call for tax returns. This can be done whether or not your are self-employed.

Business Owners – Mortgage Without Tax Returns

If you are self-employed and show significant tax write-offs, you may have been told you don’t qualify for a mortgage.

It is extremely common for business owners to take advantage of the write-offs available to them. The only problem is: when it’s time to get a traditional mortgage, their debt-to-income ratio “on paper” looks too high.

The solution would be to get a bank statement mortgage. These require at least 600 credit score.

A bank statement loan is a mortgage approval process that allows self-employed borrowers to have income calculated based on bank deposits. With this type of loan, tax returns are excluded from the equation.

Personal Bank Statements

When using personal bank statements to qualify, you do not have to be 100% owner of the business.

You must be in business for at least 2 years. Income will be calculated based on 12 months deposits, minus any non-business related deposits.

In addition, you’ll need to provide up to 3 months business bank statements to show that the deposits are coming from a business account into your personal account.

Business Bank Statements

If looking to use business bank statements to qualify, you must be 100% owner of the business.

You can either:

1. Use an average of 12 months deposits, minus 50% expense factor, or
2. Use an average of 12 months deposits, minus an expense factor that a CPA confirms is acceptable.

Using option 2 allows you to not have to get a full 50% hit off of deposits. Because it may be that your actual expense factor is only 30%. If that is the case, it would be more appropriate to get the CPA letter to confirm, so that more of your income deposits are usable on your mortgage application.

P&L Only Mortgage

For well qualified borrowers, a Profit and Loss Only Mortgage is available.

Income approval is done based on a CPA prepared profit and loss statement.

In addition to the P&L, CPA needs to provide a letter stating borrower business name, percentage of ownership, how borrower files tax returns (sole proprietorship, partnership, etc.), and how long the CPA has been filing their returns.

Bank statement mortgage and P&L only mortgages are a type of a “portfolio loan”. Portfolio loans are outside-the-box mortgages that have non-traditional mortgage underwriting guidelines. More on portfolio loans here.

Wage Earners – Mortgage Without Tax Returns

If you are a wage earner (hourly or salary employee) you should not be required to provide tax returns on mortgage approval in most cases.

Standard requirements allow wage earners to only provide W-2s (as well as most recent 30 day pay stubs) to prove earnings.

The lender will also likely order W-2 transcripts from the IRS to confirm the IRS records match what you provided.

In addition, your lender will order a verification of employment to confirm you still are employed prior to closing.

If you receive incentive pay (bonus, overtime, etc.) your lender will order a full written verification of employment from your employer to verify amount of incentive pay average over the last 24 months.

If you qualify for the mortgage without the incentive pay, the written verification of employment shouldn’t be needed.

When 25% or more of your income is commission, you’ll likely be required to provide tax returns. This is due to some write-offs that commission paid employees are eligible for.

Real Estate Investors – Mortgage Without Tax Returns

If you are a real estate investor, it is likely you take advantage of many write-offs that are available to you.

Those can cause your adjusted gross income to be very low (on paper) compared to what your actual income is.

For real estate investors, a Cash Flow Mortgage may be the best option for you.

With a Cash Flow Mortgage, your income approval is based on the cash flow of the property, NOT your personal income.

In this case, the tax returns are not provided.

The appraiser will do an analysis of fair market rent to confirm the property pays for itself.

If there is a negative cash flow scenario, there still may be an option depending on down payment (or existing equity if it’s a refinance).

This cash flow mortgage is a breath of fresh air for many investors because it also doesn’t have a restriction on how many properties you currently have financed.

More on cash flow mortgage here.

No Income Verification Mortgage Loan – Mortgage without Tax Returns

If you are looking to keep your income/employment history private or if you don’t fall within any of the categories listed above, a no income verification loan will be your solution.

With a no income verification mortgage, you do not list your income or employment information on the application.

The loan is approved based on credit and reserves.

This is available on primary residence and 2nd home, purchase and refinance.

Everything you need to know about about a no income verification mortgage here.

In summary, there are 6 ways to get approved without tax returns that I have covered in detail above…

1. Personal Bank Statement Loan
2. Business Bank Statement Loan
3. Profit and Loss Only Mortgage
4. Wage Earner (traditional)
5. Cash Flow Mortgage
6. No Income Verification Mortgage

For all options listed (except #4), these are a type of portfolio loan which are designed to meet the needs of unique mortgage scenarios. More on portfolio loans here.

If you have been told you do not qualify due to the way your income is shown, I invite you to reach out.

I have been able to help many borrowers who were told by other lenders that they don’t qualify. If I cannot help, I will point you in the right direction at the very least.

I invite you to reach out.

Get your questions answered.

We have gotten many borrowers all over the country approved for a mortgage even when several lenders said it couldn’t be done.

If we cannot help, I should be able to give you the guidance needed to get approved in the near future.