If you apply for a mortgage here at Butler Mortgage (or any other lender in the U.S.), we will likely request your tax returns before offering any financial assistance. While you would think that normal financial documents cover everything needed to get a mortgage, the last two years of your tax returns are required for most mortgage loan products and paint a more detailed picture than typical income documentation like paystubs. Let us explain why your tax returns are crucial for your mortgage application.
What Part of My Tax Returns Are Needed?
We need to see all pages of your tax returns so that we can determine how much you can afford for your monthly mortgage. Generally, you will have to provide the last 1–2 years of personal tax returns, business tax returns (if you own more than 25% of one), and W-2s or 1099s. These documents let us see if you have a steady income that can sustain future mortgage payments. They also alert us of any write-offs and deductions, which may not be useable when calculating your income for qualification purposes.
How Do My Tax Returns Help Me Qualify?
When we look at your tax returns, we are looking to pull out key pieces in order to construct your total monthly income as it is defined in federal mortgage lending guidelines. Once we have that number, we are able to determine your debt-to-income ratio, or DTI. This is calculated by dividing your monthly debts (including your future mortgage) by your average income in a month. While we can work with a range of different DTI percentages, a lower ratio will allow for a higher mortgage and is more appealing to an underwriter, especially when other areas of your application, such as credit or assets, are not as strong as they could be.
Central Florida Mortgage Lenders
Getting a mortgage can seem like a daunting process, especially when lenders want to dig through your financial information and history. However, our goal at Butler Mortgage is to help you achieve your dreams and get a mortgage loan. Your financial records are crucial to making that happen. We are experts at analyzing even the most complex tax returns and will work with your situation to figure out the best plan for your future. Contact us today and request a free consultation at 407-931-3800.