January 4, 2011
When applying for an FHA home loan, borrowers will find a list of documents needed so the lender can process the FHA home loan application. These documents are the minimum needed to establish an accurate picture of a borrower’s credit and payment history; the lender asks for a range of information–everything from bank account numbers to a list of residences and employers from the last two years.
But the lender also has to meet FHA requirements, and in some cases that means getting official copies of tax returns and other information.
In typical FHA home loan cases, most applicants are required to furnish copies of their W2s from the last two years. The W2 shows how much the borrower made, any applicable taxes, and serves as a record of actual wages earned which verifies what the borrower listed as income on the FHA mortgage loan application.
Self-employed borrowers have additional requirements as spelled out in FHA rulebooks; any applicant who owns their own business or works for themselves must supply the actual tax returns to verify their income. Borrowers cannot simply hand over copies of their version of the returns–the tax returns must be supplied directly from the IRS, much in the same way that credit reports must come directly from the credit reporting agencies.
Your loan officer may ask you to sign a release authorizing the bank to request IRS forms on your behalf, a typical part of doing business when it comes to the self-employed and their FHA mortgages.
Those who are not self-employed are usually able to furnish the W2s with no additional paperwork needed, but release forms may still be required so the bank can obtain credit reports and related information.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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