When two years of signed individual federal tax returns are provided, the lender may waive the requirement for business tax returns if:
- the borrower is using his or her own personal funds to pay the down payment and closing costs and satisfy applicable reserve requirements,
- the borrower has been self-employed in the same business for at least five years, and
- the borrower’s individual tax returns show an increase in self-employment income over the past two years.
For additional information, see B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower.