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Does How You File Taxes Affect Mortgage Qualification?

Does how you file your taxes affect your ability to qualify for a mortgage? My spouse and I are thinking about filing our taxes as “married filing separately” but we do not want it to prevent us from getting a mortgage.

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

How you file your taxes has no real impact on your ability to qualify for a mortgage. Lenders use your tax returns to confirm information provided in your mortgage application such as your income and assets. Lenders typically request tax returns for the prior two years for all mortgage applicants.

As long as there are no significant discrepancies between your loan application and your tax return, then it should not matter if you file a joint tax return or if you file your return as married filing separately.

The only difference if you and your spouse file your tax returns as married but filing separately is that you both are required to provide the lender copies of your tax returns as opposed to providing one tax return if you file a joint return.

So if you filed your taxes as married filing separately for past two years then you and your spouse are required to provide a total of four tax returns when you apply for a mortgage -- one return for each of you for the prior two years.

If you and your spouse file your taxes separately this year but filed a joint return the prior year then you are required to provide three total tax returns to the lender -- one return each for the year you filed separately and one combined return for the year you filed jointly.

If you and your spouse file your taxes jointly for the prior two years then you are only required to provide two returns to the lender.

In short, when you apply for a mortgage, the actual information on your tax return is more important than how you filed your return. Lenders want to make sure that your loan application is accurate and they use your tax returns as well as other documents such as W-2s, pay stubs and bank statements to verify the information you submitted.

Review our Mortgage Document Checklist

As long as all borrowers listed on the mortgage can provide two years of tax returns -- either joint or individual returns -- and they confirm the other information you provided the lender, specifically regarding your income, you should be well-positioned to get approved for the loan.

If you have questions about the documents required for a mortgage, including tax returns, we recommend that you contact multiple lenders in the table below to understand their guidelines. Knowing the documents that you are required to provide before you apply for the loan helps you better prepare for the mortgage process.  Plus, shopping lenders is the best way to save money on your mortgage.

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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. Click for more information 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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