No, it's not a T-Rex, aka Tyrannosaurus Rex killing your mortgage loan. It's your 4506-T.

Reblogger Brandon Snider
Mortgage and Lending with Willow Bend Mortgage NMLS# 181033


This is a great post laying out the importance of disclosing all the income and other tax-related during your mortgage application.  See one of my recent posts about how a borrower with a 720 FICO score got turned down.  It was a very similar situation, except for in my case it was rental property.

Read below,

Brandon Snider



Original content by Jeff Belonger


warning - 4506 t - can kill a mortgage deal


In the ever changing world of mortgages, you really need to stay on top of what is going on. So many think it's simple when pre-qualifying a borrower. But if you don't ask the right questions upfront and get very detailed, even the cleanest of deals could crash and burn.

So what is a 4506-t and what is its importance in the mortgage process?  Basically it's a form used by lenders that allows them to request a transcript copy of your tax returns from the IRS.  In the past, this form most times was used for those that were self-employed or to keep fraud in check. If a lender suspected something funny regarding your income, they could send this form to the IRS.



taking a much closer look at all mortgage loans


Your income is being examined very closely now by most lenders. No matter if you are self-employed or the lender/investor thinks there might be fraud involved, 4506-t's are being pulled on all borrowers. Now, I have heard some lenders brag that they aren't doing this, but is that true?  I don't know, but I can tell you this, all the lenders that I know are doing this.

So I am a loan officer who pre-qualifies a borrower, asking them their current income situation. The primary borrower has a full time job at their current job of 8 years and makes a salary of $85,000 a year. Hey, it sounds cut and dry, right?   Wrong !!! The borrower also has a side job in which she has been collecting and selling antiques for 3+ years. She even files taxes on this legally. Okay, so what's wrong?  Well, she shows a loss on her tax returns. On a salary borrower, in most cases, we just have to collect W-2 forms for 2 years on FHA loans. Some lenders require the borrowers full tax returns no matter what.  But what happens if your lender doesn't require this? Hence the reason now for the 4506t. When we get the transcript back from the IRS, it will list what she grossed on her primary job and show any other types of incomes, no matter if she showed a profit or a loss.  In this case, the borrower showed a major loss, which had to be counted towards her income. And just because of this, it killed the deal because her qualifying ratios went through the roof.




Summary : No matter what the loan officer asks you, especially when it comes to your income, give them every bit of information for the last 2 years.  If the loan officer tells you that they don't need your other sources of income, especially if it's showing a loss, just pick up and leave.  Find a new lender. The 4506-t is extremely important and could be the difference of you moving into your house or not. And this doesn't matter if you are applying for a FHA loan, a USDA loan, a VA loan, or a conventional loan. It all comes down to the lender or the investor buying the loan.






follow Jeff Belonger on Twitter               The FHA Expert   

                                                                                                           FOLLOW ME ON FACEBOOK



- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- FHA Home Loans - Mortgages -


Experience & Knowledge at its BEST !!!



Follow me on:

Mortgage Myth Busters




For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!


For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors


Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc


This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Brandon.. thanks for reblogging this... because this is starting to happen more and more now.  thanks

jeff belonger

Jul 31, 2010 06:43 AM #1
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


Brandon Snider

Your Lender for Life
Ask any mortgage question
Spam prevention

Additional Information