Can You Get A Mortgage without Tax Returns?

Written by Banks Editorial Team
3 min. read
Written by Banks Editorial Team
3 min. read

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You want to purchase a home but can’t get approved for a traditional mortgage due to issues with your tax returns. This isn’t uncommon for individuals with lower gross incomes due to tax write-offs. Unfortunately, many lenders use this income figure when deciding how much of a home loan you qualify for, if any, or if your gross income is too low. The good news is there are programs that exist through private money lenders to help those who can’t get a mortgage with traditional tax returns. 

Traditional and NQ Mortgage Loans

 
Are you looking to finance a home too expensive for a conventional loan? An Angel Oak Jumbo Loan can provide financing for up to $3.5 million.

Why Mortgage Lenders Ask for Your Tax Returns

Oftentimes, a new home is the largest purchase most consumers make in their lifetime. If you’re unable to pay cash and take out a mortgage instead, it’s also likely to be for a significant amount.

The lender wants reassurance that you can afford to pay back the funds you borrow, hence the request for your tax returns. Most traditional lenders will also request other documents to verify your income, like pay stubs or bank statements

Are There Any Mortgages You Can Get Without Tax Returns?

It’s possible to get approved for a mortgage without providing tax returns. You will most likely find these innovative home loan options from reputable private lenders, like Angel Oak Home Loans

How Do You Qualify for a No Tax Return Mortgage?

Not all mortgages that don’t require tax returns for approval are the same. So, it’s best to confirm the eligibility criteria with the lender before applying to determine if you could possibly qualify for funding. 

Keep in mind, though, that most lenders require a loan-to-value of 80 to 90 percent, a minimum credit score of 640 (or 620 for properties with an LTV that will be owner-occupied) and three to six months of reserves. Your debt-to-income (DTI) should also be no more than 45 percent, although some lenders permit a slightly higher percentage if your credit score is higher. 

Alternative Requirements If You Don’t Have Tax Returns

If you’re applying for a mortgage without supplying the lender with tax returns, you may be required to adhere to the following guidelines: 

Self-employed Borrowers

The lender will typically confirm that you’re a self-employed individual by requesting a copy of your business license from your respective state or looking up your company on the state’s website. You could also be required to submit 1099s from the most recent tax year to prove your status as a self-employed applicant. 

Traditional and NQ Mortgage Loans

 
Are you looking to finance a home too expensive for a conventional loan? An Angel Oak Jumbo Loan can provide financing for up to $3.5 million.

Down Payment

You’ll also be required to make a down payment, usually between 10 and 20 percent, to secure a home loan with no tax return. The exact amount will depend on the lender, loan type, loan amount, your credit and overall financial profile. 

Credit Score

Each lender sets its own thresholds for credit scores. Keep in mind that you could get approved with a lower credit score, but the down payment requirement could be higher, or the DTI ceiling may be more stringent. 

Bank Statements

Be prepared to provide personal and business bank statements for the last 12 to 24 months. Most lenders will divide the total yearly deposits by 12 or 24 to determine your average monthly income and use it to calculate how big of a loan you’re eligible for. If you’re also using business statements to qualify for a loan, the lender may opt not to factor in the total deposits received in your company account. 

Other Assets You May Own

Some lenders also consider the assets you have at your disposal when reviewing your home loan application. 

Property Types

In most instances, these home loan products will only be available to borrowers looking to purchase properties that don’t exceed four units. So, single-family homes, vacation homes and investment properties may be allowed. 

What is the Typical Rate for No Tax Return Mortgages?

You’ll typically get a higher interest rate for a no-tax return mortgage than you’d get with a traditional mortgage product. This is due to the level of risk these home loans pose to the lender. 

The exact rate you’ll receive usually depends on the loan type, down payment and credit rating. 

Where Can You Get a Mortgage Without Tax Returns?

When you’re ready to apply for a mortgage, consider Angel Oak Home Loans. It’s a full-service mortgage lender offering the following home loan solutions for prospective buyers who don’t want to use tax returns: 

  • Bank Statement Home Loan: This home loan product is designed for self-employed individuals who want to use their personal or business bank statements to qualify for a mortgage. You could qualify for a loan between $150,000 and $3 million if you have at least two years of self-employment experience. 
  • Asset Qualifier Home Loan: With Angel Oak’s Asset Qualifier Home Loan, you can use your liquid assets to qualify for a mortgage. This type of loan makes you eligible for a mortgage without any employment, income, DTI, or tax return requirements.

If you’d prefer to explore other mortgage products, Angel Oak Home Loans may be able to assist, as there are other Non-QM and traditional home loans to choose from. Submit an inquiry today through the website, and a team member will reach out to discuss your unique mortgage needs.

Angel Oak

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All data provided by the Home Mortgage Disclosure Act, at cfpb.gov updated Dec, 19
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