Only Have One Year of Tax Returns? Mortgages are Still Possible!

When you apply apply for a mortgage, you’ll usually be asked to bring as much information as possible. This can include, but is certainly not limited to, bank statements, credit reports, asset verifications, and pay stubs.

It may also include tax returns. 

In most cases, you’ll need to bring at least two year’s worth of tax returns. For special cases or jumbo loans, you may need to bring even more.

But what if you only have one year of tax returns? What if you only recently graduated from college and just started earning your first paycheck? Even if you have only one year of tax returns, you can still get an affordable mortgage. But you’ll need to meet certain requirements.

In this situation, you’ll need to use one-year tax return programs. To get the most from these programs, be prepared with the right information before you visit the lender’s office.

Why are Two Years of Tax Returns Generally Required?

The general rule for mortgage applications is two years. If you’re self-employed, lenders will want you to have been self-employed for two years. If you are bringing tax returns, lenders want to see two year’s worth of documentation. This is because a single year doesn’t provide the reliable information that lenders seek. Two years gives a much broader picture of someone’s financial standing. If someone earned $150,000 last year, that’s fantastic. But if they earned $150,000 for two consecutive years, lenders will feel more confident that these earnings will continue.

When Might Someone Have Only One Year of Returns?

It seems like having two years worth of tax returns would be fairly common. However, there are many situations that might lead someone to only having one year.

The most common situation is when a person has recently switched to self-employment.  As a self-employed individual, you may not have the documentation that most lenders require.

If someone has recently graduated college and did not have an income while in school, they may only have one year of returns. If you fit into these categories, or if you only have one year of returns for any other reason, you may still be able to get a loan, but you need to be prepared with the right documentation.

How to Get the Most from One Year Tax Returns Programs

Bring the Right Documentation

As we’ve discussed before in our blogs, lenders love information. They want to see as much information as possible, so if you can’t bring two years of tax returns, you can essentially make up the difference by providing different information.

Recent Paycheck Stubs

Recent paycheck stubs show your income and give verification of your earnings to lenders. While you may not have two years worth of saved paychecks, you should bring as many as possible to demonstrate that your earnings are consistent and steady.

A Complete List of Debts

New home mortgage with one year of tax returns
Even with one year of tax returns, an affordable mortgage on a wonderful home is possible!

Even with one year of tax returns, mortgages on high-quality homes are still possible. Lenders want to know how much you earn, but they also want to know how much you owe. Bring a complete list of your debts, including credit cards, student loans, car loans, child support payments, and consumer debts of any type. With these documents, the lender will be able to calculate your debt-to-income ratio, helping them obtain a better idea for the amount of money you can borrow.

List of Assets

In many cases, the largest assets will be money in the bank. By showing your assets through bank statements, you demonstrate that you have saved money through a steady process, without large gifts or other payments.

Your assets can go beyond bank statements. Investment accounts, other real estate, auto titles, and brokerage statements can all be used as assets towards loan approval.

Proof of Service

If you served in the military but have had a break in income, you may only have one year of tax returns available. To increase your chances of a loan, bring verification of your service, which is often a DD Form 214, Certificate of Release or Discharge from Active Duty. This will be especially important when seeking a VA loan.

If You Own a Business, Bring Profit and Loss Statements or 1099 Forms

Self-employed borrowers need to provide specific information on the details of their business. This will often include profit and loss statements, which can be used even if the fiscal year is only half over or if you haven’t yet filed for the prior year.

Alimony or Child Support Documentation

If you receive alimony or child support in any amount, bring this information with you to the lending office. The documented payments can increase your documented income, which will benefit your debt-to-income ratio. In turn, this could bring better financing and a potentially larger loan.

Other Documents for Lenders

There are many other documents that you may be able to bring, including:

  • Lease agreement for rental property
  • Home sale contract
  • Bankruptcy discharge papers
  • Divorce decree

Consider Loans from VA, USDA

Under certain situations, special loans from the Department of Veterans Affairs or the United States Department of Agriculture may be obtainable with only one year of tax returns.

To qualify for a VA loan, you will need to be current or former military personnel or family of a service member. These loans are often more lenient in their requirements, helping military families get affordable housing with fewer restrictions.

USDA loans are also available in certain suburban and rural locations. These loans are designed to encourage the development of specific area, and you don’t necessarily have to work in farming or livestock to apply.

Helping You Get Approved No Matter What Your Situation

If you only have one year of tax returns, contact San Diego Purchase Loans to find out how we can help. We take a common-sense approach to lending, going beyond simple numbers and documents to get you approved.

Even if you have only one year of tax returns, we’ll work with you to find the right loans to meet your specific needs and budget.


highly recommend Chad and his team. They were always available for any questions, concerns etc. we had. The process to close the loan went super fast. Chad and his team always went above and beyond. The customer service was the best! I will definitely recommend to all Thank you again for everything!

“We’re loving our new place and we’re very pleased with how smoothly everything went through closing. Thanks for keeping us up to date on the possibility of refinancing at a lower rate; we trust your judgement as far as waiting until the rate is around 5% lower before we refinance. We’re very interested in pursuing that if rates drop to that level. Thanks so much for all your help and personal attention!”

Thank you Chad and Team

Chad and his team have been a pleasure to work with. I’m a 3rd time home owner. Wish I had known Chad and team a lot sooner. He made my 3rd home purchase very easy. There were a lot of moving pieces and they handled with professionalism and care. Juliann was a pleasure to work with too. The whole team made it possible for us to move into our dream home. Thanks you Chad and Team!

I hope you enjoyed reading this article. It's my goal to keep you updated with the latest real estate mortgage news. I'm proud to provide you with 100% original and unique content. Subscribe now to get high quality real estate mortgage content and articles delivered directly to your inbox. Chad Baker is Regional Manager for Cross Country Mortgage. Chad is consistently recognized in the top 1% of mortgage originators in the United States 2011-2019. Got a question for Chad? Call (858) 353-8331 or submit your question online