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Required File Prior Year Tax Return Qualify Mortgage?

Are you required to file your tax return for the prior year before you apply for a mortgage?

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

The answer to your question depends on when you apply for your mortgage and when your loan is scheduled to close.  In most cases if your loan closes before April 15th, you are not required to file or provide your tax returns for the prior calendar year but I recommend that you review the timing scenarios I outline below. 

You applied for your mortgage before April 15th and your loan is scheduled to close prior to April 15th

You should not be required to file your tax return for the prior year to get final approval for your mortgage.  For example, if you applied for a mortgage on March 1, 2019 and your loan is scheduled to close on April 10th, 2019, you are not required to file your tax returns for 2018 to be eligible for the loan.  You are, however, required to provide your tax returns for the previous two years to qualify, which in this example are 2016 and 2017.

You applied for your mortgage before April 15th and your loan is scheduled to close between April 15th and June 30th

In this case, if you have already filed your tax return for the prior calendar year, you are required to provide it to the lender.  If you have not filed your tax return for the prior year, you are required to provide your returns for the previous two years.  For applicants who fall into this timing category, filing your tax return for the prior calendar year is "recommended but not required."

You applied for the mortgage before April 15th and your loan is scheduled to close between July 1st and October 14th or  You applied for the mortgage between April 15th and October 14th and your loan is scheduled to close before December 31

You are required to provide your tax return for the prior calendar year.  For example, if you applied for the mortgage on April 20th, 2019 and your loan is scheduled to close on July 15th, 2019, you are required to provide your tax return for 2018. 

If you fall into either of these timing categories and you have not filed your tax return for the prior year, you can also qualify for the mortgage by providing your tax returns for the previous two years, a copy of the extension you filed with the IRS (Form 4868) and an IRS Form 4506-T that shows that you have not filed your tax return for the prior calendar year.

The lender compares the information on your extension form to your previous tax returns to verify that your income remains relatively steady.  If the tax liability on your extension form changes significantly as compared to your tax returns you may need to wait until you file your tax return for the prior calendar year before you can qualify for the loan.

You applied for the mortgage between April 15th and October 14th and your loan is scheduled to close between January 1st and April 14th of the following year

You are required to provide your tax return for the prior calendar year.  For example, if you apply for the mortgage on October 1st, 2019 and your loan is scheduled to close on January 10th, 2020, you are required to provide your tax return for 2018.

Please note that in addition to two years of tax returns, lenders usually require that you provide additional documents including your W-2s or 1099s for the prior two years plus pay stubs and bank, investment and debt account statements for the prior two months.

Review our Mortgage Document Checklist

We recommend that you contact multiple lenders in the table below to confirm their document and tax return requirements as guidelines vary.  Shopping lenders is also the best way to save money on your mortgage.

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Current Mortgage Rates in San Diego1, California1 as of September 30, 2020
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Data provided by Brown Bag Marketing, Inc. Payments do not include amounts for taxes and insurance premiums. Read through our lender table disclaimer for more on rates and product details.

Sources

"B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns."  Selling Guide: Fannie Mae Single Family.  Fannie Mae, February 27 2018.  Web.

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About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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