The thrill of discovering your dream home after months or years of saving up and scouting the market is unmatched. 

But if you have unfiled tax returns, it can be a major roadblock when it comes to getting a mortgage. 

Fortunately, there are options available for self-employed individuals with non-traditional income sources or difficulty documenting their income through tax returns. And that's exactly what we'll explore in this article.

Can I Get A Mortgage If I Have Not Filed My Tax Returns?

The short and sweet answer is yes, you can still get a mortgage if you haven't filed your tax returns. That being said, it will limit your options. 

To assess a borrower's creditworthiness and ability to repay a mortgage, lenders typically require tax returns as part of the application process. 

These documents provide lenders with important information on a borrower's financial situation, including income, expenses, and overall financial stability.

In the absence of these, you'll have to prove to the lender that you're able to repay your mortgage by showing them alternative documents that prove your income, like bank statements, personal asset statements, etc. 

Working with a qualified lender who understands your unique financial situation will help you determine the best path toward homeownership.

Now, let's explore the two options you'll have if you aren't using tax returns to qualify.

Option 1: Bank Statement Loan

A bank statement loan is a type of mortgage that allows borrowers to use their personal or business bank statements to show their income and ability to repay the loan. 

Instead of tax returns, the borrower must provide bank statements for a certain period, usually 12-24 months, to demonstrate a stable cash flow.

This type of loan is ideal for self-employed people with non-traditional income sources, such as rental or investment income, or those who have difficulty documenting their income through tax returns.

While bank statement loans can be an excellent option for some, they often come with higher interest rates and fees. It's best to speak with a mortgage expert to discuss the specifics of this loan.

What Are The Qualification Requirements For Bank Statement Loans?

Most bank statement loans require the following qualifications (although the requirements may vary from lender to lender):

• Credit Score: Your credit score will significantly impact how much you can borrow and the amount you'll need to put down. Most lenders will want to see a minimum credit score of 660; however, at Modern Day Lending we have some programs that will let you go as low as 600.
• Bank Statements: You must provide 12-24 months of complete bank statements (even blank pages) to demonstrate consistent income and deposits.
• Debt-to-Income Ratio (DTI): In order to qualify, the borrower's debt-to-income ratio must fall within the lender's parameters—typically, 50% or lower.
• Down Payment: The down payment depends on the loan amount and your credit score, but it's entirely possible to put 10% down on these types of loans.

Option 2: No-Income Verification Loan

Now, for those of you that don't have regular deposits going into your bank account or don't want to use those accounts for whatever reason, you can still get a mortgage through a no-income verification option.

For these loans, lenders will look at other factors to determine the borrower's ability to repay, such as credit score, down payment amount, and cash reserves.

Since you're not providing the underwriter with traditional documentation, it's crucial to be financially responsible by having a good credit score, paying bills on time, and having a sizable down payment, and cash reserves.

Just bear in mind that the qualification requirements and interest rates for these loans can vary depending on the lender and your individual circumstance—but expect to pay higher rates for these types of loans.

What Are The Qualification Requirements For No Income Verification Loans?

As we previously mentioned, the qualification requirements will vary depending on the lender and your financial situation; however, most lenders will require that you have:

• Strong Credit: To qualify for this type of loan, you'll need a strong credit score (700+).
• Healthy Down Payment: You'll need a minimum of 20% down.
• Large Cash Reserves: Lenders will expect you to have between 12-24 months' worth of monthly mortgage payments saved up.

Tips To Improve Your Chances Of Securing These Loans

Even though each loan qualifies you differently, you'll have better odds if you:

Optimize Your Credit Score 

Since you're not using traditional documentation for income verification, you'll want to present the strongest credit score and history possible. To do this, we recommend the following:

• Paying off any delinquent debts and avoiding late payments
• Keeping your credit utilization ratio low (ideally, below 30%)
• Checking your credit report for errors and taking steps to correct them

Demonstrate Financial Stability

Remember, lenders see these types of loans as riskier, so the more evidence of your financial responsibility you can provide, the higher your chances of getting approved. 

Lenders need to see that you are equipped with the ability to manage your payments. To help you prove your financial stability, we recommend:

• Having at least 20% saved for your down payment
• Building large cash reserves to cover one to two years of your mortgage payments
• Preparing personal asset statements

Lower Your DTI

Lenders use this figure to determine if the loan they offer will suit you and won't cause you too much financial stress. Here's what you can do to reduce your DTI:

• Paying off existing debts
• Making sure that all your payments are up to date
• Negotiating lower interest rates with creditors

Work With an Experienced Lender

Getting approved is easier if you find a lender or broker who knows how to handle bank statements and no income verification loans. 

An experienced lender can help guide you through the process, calculate your income, provide advice on what documentation you need, and find a loan product that fits your needs. 

Here are some tips for finding an experienced lender:

• Research lenders online and read reviews to see what others have to say about their experiences.
• Check with friends or family who have gotten similar loans.
• Talk to potential lenders about your loan options and ask questions.
• Look for lenders who are transparent processes and who are willing to work with you to find a loan that fits your financial situation.

At Modern Day Lending, we specialize in providing tailored mortgage solutions to individuals with unique situations. 

Our team of experienced professionals has over two decades of experience securing bank statements and no-income verification loans for homeowners.

We understand the challenges that come with not fitting the traditional lending mold, and we know how to help you secure the financing you need.

Contact us today to learn more about our loan products and to get started on your application.