When applying for a mortgage, lenders typically require two years of tax returns as proof of income and employment. This standard requirement can make it difficult for certain borrowers to qualify, such as self-employed individuals, those with gaps in employment, or those who haven’t filed tax returns for the past two years.

If you find yourself in a situation where you cannot provide the standard two years of tax returns, don’t lose hope. There are still options available to help you secure a mortgage. Here’s what you need to know about getting a mortgage without having to provide 2 years of tax returns.

Traditional Mortgage without 2 Years Tax Returns

I am going to be crystal clear: if you are not self-employed, work for family, or have rental properties you don’t need to provide tax returns to get a mortgage if you’re a W2 employee.

The problem is most lenders require tax returns by default. The result is many borrowers are denied by those lenders unnecessarily due to write offs or years not filed.

If you’re a W2 employee looking to get approved without tax returns, we’re more than happy to help.

If you have a more unique income situation let’s dive into your options now.

Alternative Income Documentation – Mortgage without 2 Years Tax Returns

Lenders’ main concern is verifying that you have a stable and sufficient income (or assets) to make your mortgage payments. If you cannot provide tax returns, you’ll need to provide alternative documentation to prove your ability to repay the loan.

This route is mostly commonly used by business owners and real estate investors. Let’s take a look at the different options available.

Bank Statement Loan

With a bank statement loan, you do not provide any tax returns. This is a great option if you’re self-employed or a private contractor.

You will provide 12-24 months of personal or business bank statements as proof of income.

Your bank statements will be carefully reviewed to determine an average monthly income.

You will also provide a basic business narrative to give underwriting clarity on your business structure.

More on bank statement loans here.

Profit and Loss Statement (P&L Loan)

If you’re self-employed, you can provide a profit and loss statement from your business, prepared by an accountant or tax professional.

This should cover the past 12 months.

This is a much more simple route to go than a bank statement loan if you have a CPA or tax professional to help with providing the 12 month P&L.

1099 Loan

For freelancers or independent contractors, you can provide 1099 forms from your clients or employers to document your income.

Asset Depletion Loan

If you have significant assets, such as investments or retirement accounts, these accounts can be used to determine your ability to repay the loan.

For this product you do not list any employer or income source on your application.

The income piece of the mortgage approval is based on your liquid assets.

Everything you need to know about asset depletion loans here.

DSCR Loan – Investor Cash Flow

For real estate investors, DSCR loans use the rental income from your investment properties as the primary income source.

Your ability to repay the loan is based on the fair market rent on the property.

These are allowed on long term rentals as well as short term (vacation) rentals.

When the appraisal is ordered, there will also be a 1007 rent schedule where the appraiser will give an opinion of fair market rent.

Even if the property is in a negative cash flow position or vacant, there are still options available.

Everything you need to know about DSCR loans here.

Seek Professional Assistance – Mortgage without 2 Years Tax Returns

Navigating the mortgage process without tax returns can be complex, so it’s wise to seek assistance from a knowledgeable mortgage professional.

An experienced loan officer can guide you through the process, advise you on the best loan options for your situation, and help you gather the necessary documentation.

In Summary

The best 6 options to get approved for a mortgage without 2 years tax returns are:

• Traditional Mortgage – W2 employees
• Bank Statement Loan – Business owners and private contractors
• Profit and Loss Loan – Business owners
• 1099 Loan – Private contractors
• Asset Depletion Loan – High net worth individuals
• DSCR Loan – Real estate investors

While getting a mortgage without tax returns is certainly possible, it requires more effort and preparation. By understanding traditional mortgage options, exploring alternative income documentation options, and seeking professional assistance, you can improve your chances of securing a mortgage despite your unique financial situation.

I invite you to reach out.

Get your questions answered.

We have been extremely successful with getting borrowers approved even when other lenders said it was not possible.

If for some reason we cannot help, we’ll do our very best to work with you to put you on a path toward accomplishing your goals.