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Completing a Mortgage Application Without a W-2 Form

There are a few standard pieces of documentation that are generally used when applying for a home mortgage, and one such piece is the W-2. A W-2 is a basic tax form that allows you to properly report salary and wage information to the IRS, plus contains tax withholding information and other vital data, and it’s a very common document required by lenders to get a picture of your finances while assessing your application.

At City Creek Mortgage, we’re proud to help you find the best mortgage rates no matter what your buying or application position is. What if you’re someone who owns your own business, does contracting or does not receive a W-2 for one of a few other reasons? Luckily, there are several options available for you in this case. Let’s go over everything you need to know. 

Applying Without a W-2

There are a couple important tactics to take if you’re applying for a home loan without a W-2:

  • Tax returns: In these cases, lenders will lean heavily on your tax returns to prove you’re receiving steady income. They’ll want at least two years of such returns, if not more. These returns won’t necessarily indicate the sort of monthly income lenders need to see, but they will show that you earn money and are able to pay off a loan on a yearly basis. They’ll combine this info with areas like your credit score and your debt-to-income ratio to get a good idea of your finances and creditworthiness.
  • Home loan types: It’s important to research the loan types that might be available to you, which will differ from a conventional situation. For first-time buyers, many FHA loans are available if you can provide solid tax returns and 1099s. In other cases, many states have Bank Statement loan programs that work for self-incorporated individuals, looking at monthly deposits over time rather than W-2s.

Improving Qualifying Likelihood

Some basic tips to help your chances of approval if you aren’t including a W-2 in the application:

  • 89/Pay down debt: Your credit situation and debt-to-income ratio are vital factors that become even more important without a W-2, and paying down debt helps improve them.
  • Down payment: The more you can put down up front, the less you need to borrow and the better your chances.
  • Savings: Another way to improve your debt-to-income ratio is to have a large amount of savings built up.
  • Co-signer: In some cases, a co-signer with a steady income stream will help push you over the top and receive approval from a lender.

At City Creek Mortgage, we’ll help you understand which programs you can qualify for even without a W-2. For more on this or any of our other mortgage services, speak to our staff today. 

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