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Only have one year of tax returns (as self employed) Will I be able to buy a home?

by garrett103 from New Troy, Michigan. Jun 6th 2016 Reply


Yes u can one year tax returns will work

Jun 6th 2016
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Lorne Harvey (lorneharvey)
#80 ranked lender in Washington - 426 contributions

Yes, if the automated findings we use from Fannie Mae or Freddie Mac call for last years tax return only, then you are in good shape.

Jun 7th 2016
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,692 contributions

Yes, no, and maybe... The rules require you be self-employed for at least two years. When lenders run your file through the automated underwriting, you MAY get a response requiring only one year of tax returns. Not all lenders allow for just one year, and if you've only been in business for less than two-years, any sharp eyed underwriter will catch this and deny the application.

Jun 7th 2016
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Jericho Cherry (Jerichocherry)
#58 ranked lender in Virginia - 1,107 contributions

The rule of thumb for self-employed is at least two years.

Jun 7th 2016
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,325 contributions

Yes and no.. Freddie Mac allows for 1 year tax returns for self employed borrowers, but the tax return must represent a full 365 self employment return.. When you file a schedule C, it asks when the business was started.. if it was started after January 1st, then this would not qualify as 1 full year tax return.. Lets say you started the business in December of 2013, you file a 2013 tax return with a schedule C with 1 months income/expenses.. you file 2014, and you have a full 365 day SE schedule C.. this scenario will work for F/M.. Understand that you will still need a lender that will allow for less than 2 years (about half will allow this).. but the boilerplate conforming guidelines do allow for it.. This is why most lenders will say you need 2 full years SE income to qualify for a loan... Another thing to consider, is that when most people start a business, they will typically show a loss in the first few years.. if that is your scenario, then regardless of whether or not a lender will accept 1 years tax returns, if there is not sufficient income, then you wont qualify.. What ever income you show on the tax returns is the same income the lender uses to determine your debt to income ratios.. If you really want to know for sure, then the best advice I can give you is to contact a LOCAL mortgage broker and apply with them. Once they see your complete loan profile, they will be better equipped to advise you properly. Also, by applying with your LOCAL Broker, you have an advantage because he's familiar with local customs and works with many lenders with each one offering a different type of lending program. This is unlike the local bank which typically only has a few lending programs. The more lenders, the more lending options, and the more likely your scenario will be accepted.. Plus, the broker is experienced in seeking out the best loan terms for your particular scenario, and he has lower overhead which typically results in lower rates and fees than most of the larger lenders.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Jun 7th 2016
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