Mortgage loans that qualify on one year of tax returns
Most full-documentation loans look at two years of tax returns. Some agency and non-QM programs can qualify you on one year, which helps when your most recent year is your strongest.
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Overview
A 1-year tax return loan qualifies you using your most recent year of tax returns instead of the usual two. Self-employed borrowers use it when their latest year shows higher income than the year before. Borrowers with a recent change, such as moving from W-2 work to self-employment in the same field, use it when they do not yet have two full years of returns that reflect their current income.
There are two main paths. Some agency loans, underwritten through the Fannie Mae or Freddie Mac automated systems, allow one year of returns when the findings permit it, which often depends on how long the business has existed and the strength of the rest of the file. Non-QM lenders also offer 1-year full documentation programs with more flexible guidelines, generally at higher pricing.
Whether your file qualifies on one year depends on your income trend, your time in business and the automated underwriting results. QMS reviews your returns first, runs your file through the systems where it may fit, and compares agency and non-QM options so you can see the tradeoffs. If one year will not work, bank statement and profit and loss programs are other alternatives. All loans are subject to credit approval and lender guidelines.
Is it a good fit?
- Are self-employed and your most recent year is your strongest
- Recently became self-employed in the same line of work
- Have a long-established business with steady income
- Want a full-documentation loan without a second year of returns
- Have solid credit and reserves
- Are buying or refinancing a primary home, second home or rental
What you'll need
- Most recent year of personal federal tax returns, all schedules
- Most recent year of business tax returns, if applicable
- Year-to-date profit and loss statement, if the lender requires one
- Business license or CPA letter confirming your business
- Bank and asset statements for the past two months
- Government-issued photo ID
- Purchase contract, or mortgage statement for a refinance
How it works
How it works with QMS
Review your returns
We review your most recent return, your income trend and your time in business.
Test both paths
We check agency automated findings and compare non-QM 1-year programs.
Document and close
We collect the documents your approval requires and manage conditions through closing.
FAQ
1-Year Tax Return loan FAQs
Don't see yours? Call us or send a message. We answer the same business day.
305-425-1990Can a conventional loan really use only one year of tax returns?
In some cases, yes. Fannie Mae and Freddie Mac automated underwriting may allow one year of returns for a self-employed borrower when the rest of the file is strong, and the decision depends on the findings for your specific file. It is never guaranteed, so we run your scenario before you rely on it. Non-QM programs are an alternative when the agency path does not work.
I recently became self-employed. Can I qualify?
Possibly. Many programs look for about two years of self-employment, but some allow a shorter history when you have one full year of returns and prior experience in the same line of work. Lenders want to see that your new business continues what you did before. We review your history and tell you which programs are likely to accept it.
Is a 1-year tax return loan better than a bank statement loan?
It depends on what your return shows. If your most recent return reports strong net income, a 1-year program may offer better pricing than a bank statement loan. If heavy write-offs reduce your taxable income, a bank statement or profit and loss program may give you more qualifying income. We calculate your income each way so you can compare.
What if my most recent return is not filed yet?
Most lenders need the return they are using to be filed, and some will also ask for proof that the IRS processed it. If you are close to the filing deadline, the timing of your application matters, and an extension can affect which year a lender will use. Share your situation with us and we will help you plan when to apply.
Get started
Know your numbers before you make an offer.
Tell us about your scenario and we'll price it across our lenders the same business day.