If you’re a W-2 employee who hasn’t filed your tax returns, you may be wondering whether you can still qualify for a home loan. Traditional lenders typically require your tax returns as part of the income verification process. However, if you find yourself in this situation, there is a solution: a loan program that allows you to use only a Written Verification of Employment (WVOE) as your income documentation.
Highlights Include the Following:
• Loan amounts up to $2MM
• Interest-Only available with 30 or 40 year term
• Debt-to-Income Ratios up to 50% allowed
• Credit scores down to 680
• All occupancy types allowed
• 5/6, 7/6 and 10/6 ARM, 15, 30, and 40 Fixed Rate Mortgage (40 year term Interest-Only)
• Multiple financed properties allowed
What is the WVOE Loan Program?
The WVOE Loan Program is designed specifically for individuals like you—W-2 employees who haven’t yet filed tax returns. This program allows you to verify your income using a written verification of employment from your employer, bypassing the need for tax returns.
This program is a game-changer for many who may have sound employment history but haven’t completed their tax filings. Whether you’re a first-time homebuyer or an investor, this loan program offers flexibility and a more lenient approach to underwriting, based on common-sense lending.
Key Features of the WVOE Loan Program
Here’s an overview of some of the key features that make this loan option attractive:
- No Tax Returns Required: All you need is a Written Verification of Employment (WVOE) from your employer to document your income.
- High Loan Amounts: Borrow up to $2 million, giving you plenty of flexibility whether you’re buying your first home, upgrading, or investing.
- Flexible Loan Terms: Options include 30- and 40-year terms, with interest-only payments available if you’re looking to keep your monthly payments lower.
- Low Credit Score Requirement: Minimum credit scores of 680 are accepted, which means you don’t need perfect credit to qualify.
- High Debt-to-Income (DTI) Ratio: This program allows DTI ratios up to 50%, meaning you can allocate a higher portion of your income towards your mortgage.
- Available for Various Property Types: You can use this program for primary residences, second homes, and even investment properties.
- Interest-Only Payment Option: If you need flexibility with your monthly payments, an interest-only option is available, which could lower your payments significantly in the initial years of the loan.
Who is Eligible for This Loan Program?
This program is ideal for individuals who:
- Are employed full-time with a W-2 income.
- Have been with their current employer for at least two years.
- Have a credit score of at least 680.
- Have not yet filed their latest year’s tax return but can provide alternative income documentation.
If you’re a first-time homebuyer, you can also qualify, but you’ll need to meet additional requirements, such as providing 12 months of rental payment history.
How Does the Written Verification of Employment Work?
The WVOE is the key document in this loan program. To qualify, your employer will need to complete a WVOE form, such as the Fannie Mae Form 1005, which confirms your income and employment status.
Here’s how it works:
- Employer Completes the Form: Your employer’s human resources or payroll department will fill out the WVOE form with details about your salary, employment status, and length of employment.
- Submit Additional Documentation: Along with the WVOE, you’ll need to provide bank statements showing deposits from your employer that match at least 65% of the income listed on the WVOE. If you have any variable income, such as bonuses or commissions, you may need to provide pay stubs or additional documentation.
- Income Calculation: The lender will use the income listed on the WVOE to calculate your qualifying income for the mortgage.
This process eliminates the need for tax returns and makes the approval process much faster and more straightforward.
Benefits of the WVOE Loan Program
No Delays Due to Missing Tax Filings: For W-2 employees who haven’t filed their most recent taxes, the WVOE program can speed up the home-buying process significantly.
Flexibility for Higher Loan Amounts: The ability to borrow up to $2 million makes this program suitable for buyers in competitive or high-cost real estate markets.
Interest-Only Payments: If cash flow is a concern, opting for an interest-only loan can help you manage your finances more effectively.
Investors Welcome: Whether you’re looking to purchase a primary residence or an investment property, the WVOE loan can accommodate a wide range of needs.
Things to Keep in Mind
- Employer Cooperation: Your employer must be willing to complete the WVOE form. If your company doesn’t have a formal HR or payroll department, this could be a challenge.
- Proof of Employment: Lenders may also conduct an online search to confirm the existence of your employer. Make sure your employer has a visible online presence.
- Higher Interest Rates: Because this loan program is designed for individuals who don’t meet traditional documentation requirements, the interest rates may be slightly higher than a conventional mortgage. However, this trade-off may be worth it if it allows you to qualify for a home loan without waiting to file your taxes.
Is This Loan Program Right for You?
If you’re a W-2 employee who hasn’t yet filed your latest tax return and you’re eager to get into a new home or refinance your current mortgage, the WVOE Loan Program might be the perfect fit for you. It offers the flexibility to document your income without needing tax returns and allows you to take advantage of today’s market opportunities without delay.
Before you proceed, it’s always a good idea to speak with us to ensure that this program aligns with your financial goals. We can help you understand the fine details and guide you through the application process.
Ready to move forward? Contact us today to explore your options and get started on your path to homeownership!
