(j from Pennsylvania) Can a lender request my irs 1040 form?
Dear j:
A lender may request a number of items in addition to your consumer credit reports in order to make a decision. Mortgage lenders especially will normally ask for tax returns (Form 1040) for each of the last three years to prove income.
Lenders want to see proof of income, and sometimes you cannot get the full picture simply from pay stubs or Forms W2. If you only receive a single W2, then this is less important to the lender.
However, if you are working multiple jobs, have changed jobs within the past 3 years or are self-employed, then you can absolutely expect a lender to request copies of your income tax filings so that they can get an accurate picture of your income. Smaller loans may not normally require this information. Requesting your 1040 is generally a common practice of qualifying for a home mortgage.
You should keep your tax returns on file in case you need to reference them and provide proof of income to a lender. Remember that income is not incorporated into FICO scoring, so a lender needs to see separate evidence of your earnings in order to make an informed decision. While a credit score determines the interest rate, your earnings determines whether you can afford the loan in the first place.
If you are buying a home, you should expect to be asked to supply tax returns for each of the last 3 years. It is a routine step in the loan underwriting process.
