Tax time is approaching and many buyers are asking if they can count their tax refund when qualifying for a mortgage. The answer is yes. Tax refunds are a legitimate source of funds for a down payment, closing costs, or reserves (money a lender may require a borrower to have left over after the closing).
The only restriction is that the refund needs to be received and deposited in the borrower's bank account prior to the closing. It does not have to be received before the borrower can apply for the loan.