How many years of Tax returns is needed for a mortgage loan?

[Mike Ojo]

Just doing some calculations here. In applying for a loan, how many years of income is looked at or averaged? I ask because in the last 3 years, one year was a loss of income. First and last year both positive net income. Do loan officers look at your most recent income alone, meaning last year, or last 2 years. Or will they look up to 3 years? Also for a business owner, does your gross income play any factor or only the net income is looked at? please advise. Thanks.

[Harjeet Bhatti]

@Mike Ojo You need 2 years tax return. Net income will be taken in consideration for DTI purpose. If you have reason which can be prove by paper trail why there was negative income and your ytd income showing you will have better year than previous year you can get exception.