A no tax return mortgage is a great way to accomplish your home ownership goals, while minimizing documentation. In this post we cover everything you need to know about all the ways to get a no tax returns mortgage on a home purchase and refinance. 

Best Ways to get approved for a No Tax Return Mortgage

Many different scenarios allow borrowers to purchase or refinance a home without having to provide tax returns. 

The problem is: most lenders routinely ask for tax returns when they are not required. As a result, this leads to unnecessary documentation, and often unnecessary complication. 

Our goal is to minimize confusion, and simplify the process.

The most popular programs available for a no tax return mortgage are:

1. Wage earner – W2 and pay stub mortgage
2. Bank statement loan – for business owners and private contractors
3. Cash flow mortgage – For real estate investors

There is no one size fits all scenario. We’ll go through each option individually to help you sort through which option might make the most sense for you. 

Wage Earner | No Tax Return Mortgage

If you are a W-2 employee for a company not owned by you or your family, you should not be required to provide tax returns. 

The required income documentation for a W-2 employee:

• Most recent 30 days pay stubs
• Most recent 2 years W-2s
• A written verification of employment (if using bonus or commission income to qualify)

This applies to conventional, FHA, and VA mortgages.

Allowed on home purchase, refinance, and cash out refinance. 

This is assuming you’re not in need of using real estate rental income to qualify for the mortgage. If you need rental income to qualify on a traditional mortgage, you’ll need to provide tax returns. 

But later, we’ll cover other ways to get approved for rental property financing without tax returns with a cash flow loan. 

Bank Statement Loan | No Tax Return Mortgage

For self-employed and private contractors, a great solution to getting mortgage approval is a bank statement loan. 

It’s extremely common for business owners and private contractors to take full advantage of the tax write-offs that are available. One of the only times it really becomes a disadvantage is when it’s time to qualify for a mortgage. This is because the write-offs on tax returns commonly end up showing the borrower makes much less on paper than they actually do. 

With a bank statement loan, you do not provide tax returns. 

Income is calculated based on 12 or 24 months deposits as shown on your bank statements. 

An expense factor will be assessed depending on what type of business you are in and the number of employees you have.  

The basic documentation needed for a bank statement loan:

• 12 or 24 months bank statements, personal or business account. All pages required. 
• 3rd party proof you have been in business or private contractor for at least 2 years
• Business narrative explaining a description of your business

Allowed on home purchase, refinance, and cash out refinance. 

For home purchase, the minimum down payment on a bank statement loan is 10%. 

If you’re using business assets to qualify (down payment or reserves) you may need a CPA letter to confirm the use of business funds for a personal home transaction will not have a negative impact on the business. 

More on bank statement loans here. 

Investor Cash Flow Loan | No Tax Return Mortgage

Similar to business owners, real estate investors commonly take full advantage of the tax write-offs available to them. In many cases, this results in significantly lower income shown on tax returns. 

For investors looking to purchase or refinance their rental property without tax returns, a cash flow loan is a perfect option to consider. 

With a cash flow loan, the income approval portion of the loan is based on property cash flow, NOT personal income. 

For this loan product, you don’t even fill in the employment section of the application. 

Here’s how it works:

A 1007 rent schedule is ordered with the appraisal. A 1007 rent schedule is an analysis of what fair market rent is in your area. 

When the fair market rent covers the mortgage/taxes/insurance/HOA dues, then the income is approved. 

For a refinance: if the property is rented out, the underwriter is going to want to see the lease to confirm what is being collected. If the rent is less, you’ll need to qualify based on what the current lease agreement is showing.

The basic documentation needed for a cash flow loan:

• 1007 rent schedule (which we order when the appraisal is ordered) to confirm fair market rent
• Current lease (if applicable)
• Proof of ownership in a home in the last 3 years 

Allowed on investment purchase, refinance, and cash out refinance. 

For property purchase, the minimum down payment you can expect on the cash flow product is 20%.

This cash flow mortgage even applies to short term (vacation) rentals. 

See how this works for AirBnb/VRBO properties here. 

The investor cash flow loan is the most simple way for investors to get approved for a mortgage. The pricing is more competitive than you may think. Get pricing here. 

No Income Verification Mortgage Loan | No Tax return Mortgage

If you’re looking to keep your income/employment history private, or if you don’t meet the above requirements, a no income verification loan will be your solution.

With this type of loan you do not list your employment or income history on the loan application.

The loan is approved based on credit and reserves (assets).

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

Here is everything you need to know about a no income verification mortgage.

In Summary

The options available today to get approved for a home purchase and refinance on a no tax return mortgage including:

• Wage earner – W2 and pay stub mortgage
• Bank statement loan – Business owners and private contracts
• Cash flow loan – Real estate investors
• No income verification mortgage loan – For unique income circumstances

Each product and scenrio is unique. The most important thing you can do is work with a lender that is highly experienced in these home loan options. 

Don’t let the big box lenders tell you that you’re not able to accomplish your home ownership goals just because you don’t fit within their strict requirements. 

I invite you to reach out.

Ask your questions. 

Please feel free to reach out to get guidance on which option makes the most sense for you. We have successfully gotten many borrowers approved without having to provide tax returns when other lenders said it wasn’t possible.  

If for some reason we cannot help, we’ll do our very best to give you the steps needed to accomplish your goals.