Are 2 years worth of W2 returns needed to obtain a loan on home

[Anthony Jones]

I read somewhere that before be able to start to purchase a house and then go through the BRRR process, I first needed to have 2 years worth of W2 forms if I wanted to take out a loan and able to refinance after the seasoning period. Can anyone shed some more light on this?

[Steven Goldman]

@Anthony Jones If you are trying to refinance with a traditional government insured loan you need two years tax returns. If, you utilize a debt service coverage loan you will not need your tax returns. Just proof of funds on hand to pay the costs. The maximum cash out refinance will be 75 percent of the ARV not to exceed 1.0 debt service coverage based on the rent. So if you are collecting $2100.00 in rent and the monthly payment including taxes and insurance on the cash out refinance is $2000.00 no problem. The DSCR loan is based on your credit score and other factors not associated with your income, only the properties income. Many lenders have a seasoning period. As little as 3 months of as much as 6 months to 1 year.

A good broker or originator should be able to do a deal analysis based on the purchase price and the rehab to advise you of the approximate cash out after rehab and rental prior to your offer on the property. I advise you us a broker who provides both fix and hold and cash out products. Good luck.