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Did you know only one year of taxes may be required to qualify for a mortgage loan?

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Mortgage and Lending

 Many people are under the assumption that they need two years taxes to qualify for a mortage loan. In some instances this certainly is the case however there are situations that only require one year! This is critical in today's economy especially with 2011 wrapping up in a few months. Let me explain this further.

In your typical scenario an underwriter would take an average of the last two years taxes for income qualifying purposes. If a person had a poor 2009 but a much better 2010, the average still might not be enough to qualify for the loan amount they want. However if the loan gets ran through the underwriting system (DO or DU) and receives an Approved/ Eligible many lenders will only require income documentation this approval asks for. Many times this is only one years taxes! Not all loan types apply, not all lenders will honor this approval (some have what's called lender overlays where they require additional documents), and not all borrowers will get the one year tax return approval. However some will!

With 2011 coming to an end this can make a big difference for people getting prepared to file their taxes in a few months. This will mean the difference between some people being unable to buy and others in the same situation who then can. Contact your local mortgage broker or lender for further information on how this works. We have done them in the past, present, and will continue to in the future so long as the programs are available. This might be another way to seperate yourself from the pack with additional mortage loan knownledge. Hope this helps someone out there. Have a good day!

Posted by

Aloha Mortgage Loans

Comments(5)

Ron Marshall
Marshall Enterprises - Saint Michael, MN
Birdhouse Builder Extraordinaire

There is always something new to learn here.  Thanks for the info. 

Oct 20, 2011 07:53 AM
Curtis Van Carter
Better Homes & Gardens Wine Country Group - Yountville, CA
Your Napa Valley Broker Extraordinaire

Thanks, I have always been told two years tax statements were needed.

Oct 20, 2011 08:16 AM
Raiza Schwartz
West USA Realty - Ahwatukee, AZ
CDPE

So basically it has to be done as a MANUAL UNDERWRITE?

Oct 20, 2011 08:33 AM
Aloha Mortgage Loans
Kihei, HI

Your welcome. Take the time to dicsuss this in further detail with your local mortage loan originator. Keep in mind not all lenders will do this so if one tells you no find another one that says yes.

To answer your question Raiza, no. All the borrowers information is put into a loan program such as Caylx Point. Then the scenario is ran through a system called Direct Underwriting(DO) or Desktop Underwriting(DU). This will then provide 'Findings' which are Approved, Denied, etc. If the Findings come back Approved/ Eligible it then becomes the outline for the borrowers loan listing documents needed to qualify. So long as the borrower can provide them (assets, taxes, etc) and everything checks out they will get the loan.

Again some lenders accept the Findings while others will overlay or ask for more documents. Make sure you have one in your referral book that won't overlay.

Oct 20, 2011 08:40 AM
Lisa Dunham
Alexandria, VA
Associate Broker, Alexandria Virginia Real Estate

Thanks for the insight!  I was unaware of that such programs were available.  Much appreciated!

Oct 20, 2011 01:51 PM