Underwriting Tip – Borrowers Employed by Family Business
FHA – In addition to normal employment verification, a borrower employed by a family owned business is required to provide evidence that he/she is not an owner of the business, documentation may include:
1. Copies of signed personal tax returns or
2. A signed copy of the corporate tax return showing ownership percentage
Note – A tax transcript obtained directly through the IRS may be used in lieu of signed tax returns, and the cost of the transcript may be charged to the borrower.
FNMA – The lender must obtain copies of the individual signed federal income tax returns filed with the IRS for the past two years for the following types of salaried or commissioned borrowers:
borrowers employed by family members