How self-employed people get a mortgage loan in Kentucky

SELF-EMPLOYED

• Income must be documented as per properly submitted DU findings. DU will condition for one or two years documentation depending on input of information. Upon final running of DU documentation level changes, additional year’s tax returns or business tax returns may be required.
  • Tax returns must be filed with the IRS and must be verifiable with the execution of the 4506-T. A second year of tax returns may be required as warranted by underwriter or DU findings.
  • Self-employed borrowers, with >25% ownership interest, are required to have a minimum 2 years of consecutive self-employment.
  • Transcripts for the tax return years being used to calculate income must be returned from the IRS in order for self employment income to be considered as validated.
  • Business phone number and address must be obtained from an independent source.
  • Significant declining self-employment income is not eligible.
  • The following borrowers are also considered self-employed:
  • More than 25% of income is derived from commission.
  • Borrower relies on investments for income.
  • Members of the clergy who file taxes as self-employed.
  • 1099 Employees
  • Borrower is employed by a family member.

• All submissions must continue to include a SIGNED 4506-T form, dated within 45 days of application date, for each and every borrower on the loan application. Be sure to include separate 4506-T forms and be sure that the name, address and SSN match exactly as filed.
• Typical time frame for return of 4506-T transcripts is 24-48 hours.
• If the borrower’s most recent tax return has not been filed and they have a valid extension (Form 4868), then provide a copy of the signed, filed extension form.
• We will continue to require 2 years W-2’s, paystubs and other complete income documentation as required per AUS Findings
• Transcripts must be returned from the IRS in order for self employment income to be considered as validated.

• Paper filing: Typically 6-8 weeks form receipt by the IRS
• E-filing: Typically 15 days from receipt by the IRS

For loans underwritten or submitted for underwriting prior to June 15^th, 2012, if the borrower has filed the 2011 tax returns and the tax transcripts are not yet available, the tax transcript request will be returned from the IRS and reflect “No record found” and the following must be provided.

• 2011 tax transcript showing “No record of return filed”, and,
• Copy of the 2011 tax return, and,
• For salaried borrowers:

o        If AUS requires 1 year documentation, obtain 2010 tax transcript, current paystub and 2011 W-2.

o        If AUS requires 2 years documentation, obtain 2009 and 2010 tax transcripts, current paystub and 2010 and 2011 W-2s

o        If AUS requires a current paystub, obtain the 2010 tax transcript, current paystub, the 2011 W-2 may be required based on the overall loan when determined by underwriting

• For Self-Employed Borrowers:

o        If AUS requires 1 year documentation, obtain 2010 tax return and tax transcript.

o        If AUS requires 2 years documentation, obtain 2010 tax return and 2009 and 2010 tax transcripts.

o        2011 P&L may be required

• For a salaried borrower that has filed an extension for 2011:

o        Evidence that the extension was filed and evidence of tax payment; and,

o        A 2011 Tax Transcript showing “No record or return filed”.

o        If AUS requires 1 year documentation, obtain 2010 tax transcript, current paystub and 2011 W-2.

o        If AUS requires 2 years documentation, obtain 2009 and 2010 tax transcripts, current paystub and 2010 and 2011 W-2s

o        If AUS requires a current paystub, obtain the 2010 tax transcript, current paystub, the 2011 W-2 may be required based on the overall loan when determined by underwriting

• For a self employed borrower that has filed an extension for 2011:

o        Evidence that the extension was filed and evidence of tax payment; and,

o        A 2011 Tax Transcript showing “No record or return filed”; and,

o        If AUS requires 1 year documentation, obtain 2010 tax return and tax transcript.

o        If AUS requires 2 years documentation, obtain 2010 tax return and 2009 and 2010 tax transcripts.

For loans underwritten or submitted for underwriting on or after June 15, 2012, the 2011 Tax Return Transcripts must be provided.

• If a borrower has filed an extension, the following must be provided:
  • Evidence that the extension was filed and evidence of tax payment; and,
  • A 2011 Tax Transcript showing “No record or return filed”; AND,
• For salaried borrowers:

o        If AUS requires 1 year documentation, obtain 2010 tax transcript, current paystub and 2011 W-2.

o        If AUS requires 2 years documentation, obtain 2009 and 2010 tax transcripts, current paystub and 2010 and 2011 W-2s

o        If AUS requires a current paystub, obtain the 2010 tax transcript, current paystub, the 2011 W-2 may be required based on the overall loan when determined by underwriting

•   For Self-Employed Borrowers:

o        If AUS requires 1 year documentation, obtain 2010 tax return and tax transcript.

o        If AUS requires 2 years documentation, obtain 2010 tax return and 2009 and 2010 tax transcripts.

o        2011 P&L is required