• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Sonoma County Mortgages

Contact Us About Mortgage Financing

All financing provided by New American Funding

(707) 217-4000 | Prequalify Now

Search Sonoma County Mortgages

  • Home
  • Purchase
    • How Much Down Payment To Buy A Home?
    • How Much Income You Need To Buy A Home
    • How Much Should I Save For Buying A Home?
      • How Rates Affect Payment
    • No PMI Mortgages
    • FHA Loans
    • Sonoma County Disaster Loans
    • Jumbo Loans
  • Refinance
    • Mortgage Rates
    • Does It Make Sense To Refinance?
      • Get Your Refi Paperwork In Order
    • How To Pay Off Your Loan Faster
    • How To Remove PMI
    • How Lenders Price & Quote Loans
  • Loan Programs
  • Payment Calculator
    • Mortgage Affordability Calculator
  • Blog
  • Videos
  • About SCM
  • About Scott Sheldon

Primary Sidebar

Sonoma County Mortgages is a part of New American Funding

New American Funding - NMLS #6606

Get Your Latest Rate Quote Now!

how filing your tax returns might hurt your mortgage chances

June 26, 2022 by Scott Sheldon

Share on Facebook Share on Twitter Share on Pinterest Share on LinkedIn Share on Email
how filing your tax returns might hurt your mortgage chances

If you’re looking to purchase or refinance a home, and you have not filed your 2021 tax return yet. And this goes for any year, here’s what you need to know as it relates to showing income.

 

Let’s say you’re self-employed or you’re a W2 employee and you have additional income sources. Such as an added business for example or rental property. If you’re in the middle of a pre-approval or you’re in the middle of escrow, what you don’t want to do is submit new tax returns that show less income. Sounds simple enough but it’s not so straightforward. The lender is using your 2020 tax return to qualify you for your house purchase. You responsibly then go file your 2021 tax return showing less income. Supplying less income to the mortgage company which thereby could create a debt-to-income ratio problem. When you are in the middle of escrow you don’t want to be supplying any new documentation that supports showing less income. If you’re making less income, you should first stop and talk to your loan officer about best how to restructure your loan. Maybe it means changing loan programs, interest rates, the down payment, or putting down less money in paying off consumer debt. Any of those could be pragmatic solutions for fixing a debt-to-income ratio problem.

On the other side let’s say you’re a W2 employee and you have rental income. Those rents based on how they report could hurt your mortgage chances. Or, even if it’s questionable in any way close the loan with the income that you have. Supporting new income runs the risk of more questions and potentially more problems. Make no mistake the number one reason today why people don’t get mortgage loans is due to debt-to-income ratio. Taking on more debt than what they can otherwise afford. That also means showing less income. So, so if you know you’re going to support less income from the most recent tax filing do an extension because you don’t know what the future may hold.

Keep this in mind as it relates to supporting income; if your two most recent years’ taxes are strong, and perhaps you get the bulk of your income at the end of the year wait to file your taxes. Get an extension and a lender can close a loan for you from the January of that year until October of that year when taxes are due. The lender would only then ask for a copy of the extension form. This affords you the ability to decide what you’re going to do with your accountant as it relates to income after you’ve successfully closed on your home.

Looking to Purchase or Refinance a home? Start with a no-cost loan quote today!

Related Mortgage Advice from Scott Sheldon

  • Tax Forms and Tax Losses
    Tax return losses may hurt your mortgage chances

    Qualifying for a mortgage involves: an acceptable credit score, sufficient assets and stable income. These…

  • number 1 mistake when getting a mortgage
    What to do if you need last year's income tax returns to get a mortgage

    How's your income? This is the first of many questions a banker is going to…

  • Avoid These Mortgage Mistakes When Filing Your 2013 Tax Return

    Pay Uncle Sam and qualify on paper, short Uncle Sam, risk your mortgage loan application.…

  • Do Tax Losses On Closed Business Hurt My Chances To Qualify For A Mortgage?

    No as long as the business is actually closed it should not hurt your ability…

Filed Under: Uncategorized Tagged With: 2021 taxes, first time home buyer, home buying, refinancing with tax return, sonoma county mortgage, Tax filling, tax return mortgage, taxes affecting mortgage

Get Sonoma County Mortgages News and Updates in Your Inbox

Footer

SCM on Facebook

SonomaCountyMortgages.com

Connect on Facebook

SCM On Instagram

Follow Sonoma County Mortgages on Instagram

Follow on Instagram

SCM on Zillow

Zillow Reviews for Scott Sheldon, New American Funding

See Reviews on Zillow

Location & Contact

Sonoma County Mortgages and New American Funding are an Equal Opportunity Housing Lender

Scott Sheldon, Senior Loan Officer
NMLS ID# 287389
2455 Bennett Valley Road C107
Santa Rosa, CA 95405
1-707-217-4000
View SCM Map | Email Us!

Map of Sonoma County Mortgages New American Financing Office

View Map on Google

Copyright 2010–2023 SonomaCountyMortgages.com · About Us · Sonoma County Loans · Privacy Policy · Terms Of Use · Legal · Site Map

NMLS Consumer Access © New American Funding. All rights Reserved. NMLS ID#6606.
Corporate Office 14511 Myford Road, Suite 100, Tustin, CA 92780. We at New American Funding take great pride in our customer service and make it our number one priority. We encourage you to contact us for complaint resolution or any post-closing questions you may have regarding the servicing of your loan. We strive to have your experience with New American Funding a stellar one. In the rare case that our service did not meet your expectations, please call our customer care hotline at 1-800- 450-2010, ext. 7100 or you may contact us by email customerservice@nafinc.com. Please leave a detailed message and we will follow up with you no later than the end of the next business day. If you are using a screen reader or other auxiliary aid and are having problems using this website, please call 800-450-2010 Ext. 7100 for assistance.

State Licensing (Opens in New Window) | Privacy (Opens in New Window)
Terms of Use (Opens in New Window) | Electronic Consent Agreement (Opens in New Window)
Opens in new window Opens an external site Opens an external site in a new window