True or False: You Need 2 Years of Tax Returns to Qualify?

Mortgage and Lending with Stratis Financial


At times Fannie Mae and Freddie Mac’s automated underwriting system (DU and LP) will calculate that a borrower has good enough credit or enough equity or enough cash reserves where they find this borrower is low risk and therefore only needs to present 1 tax return.

This is very helpful especially if you are a self-employed borrower and have had a great year, but 2 years ago wasn’t as good.

If you know someone who got turned down for having low income when a bank used the “average of the last 2 years,” have them call me for a double check on that. Some banks will ask for 2 years of tax returns even though they don’t have to.


Comments (2)

Katerina Gasset
Get It Done For Me Virtual Services - Wellington, FL
Get It Done For Me Virtual Services

Hello, Athena! This is an interesting read. Thanks for sharing this and I hope you have a pleasant day ahead!

Mar 24, 2016 03:37 AM
Athena Paquette

thanks. yes Fannie Mae just aligned withFreddie Mac's underwriting guidelines that at times you will get an approval for just 1 tax return instead of 2. saves a lot of Self-employed borrowers from the downfall of the 2 year averaging...

Mar 25, 2016 04:50 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Thanks for the information Athena,  I have heard different things on this subject.  Have a great day!


Mar 24, 2016 04:22 AM