Getting a Loan with Tax Returns that are Near Zero as a Nonresident Alien

Introduction

A common practice of mortgage lenders during the loan qualification process is to ask you to sign an IRS Form 4506T requesting your tax returns over a period of years as a way to verify your income. The amount they will loan is usually limited by your income and computed from your income. The information used to validate income has to come from third party sources to ensure that it is not falsified and is trustworthy.

However, those who file with the methods documented on this site lawfully file with near zero taxable income because the information returns such as the W-2 and 1099 are corrected to be zero and not attached to the tax return. This makes it impossible for the the lender to verify how much you made by obtaining records from the IRS. Thus, members of this site must refer lenders to other third party sources of verified information to validate their income.

But WHAT information source can members refer lenders to in order to validate income if it can’t be the IRS? The solution to this is for all the people you work for to independently provide that information. Since you may work for multiple companies, this makes it more difficult because the information has to come from multiple sources instead of a SINGLE source in the form if the IRS.

Typically, instead of signing an IRS Form 4506T and handing it to the lender, instead you can draft a letter to all your business associates who pay you money and sign it and hand it to the lender instead.

If you work for yourself and have your own business, you can also provide as evidence the following and give it to your lender:

1. Bank statements.
2. Accounting ledgers.
3. An affidavit of income as well as an an agreement to accept financial penalties if the information is later determined to be false.

Some lenders may not like the fact that you are a nonresident alien, but they really don’t have a option to discriminate against you for choosing that status. Lending laws forbid such discrimination. The following resources may prove helpful if you are a victim of such discrimination:

Banking Discrimination

•  12 C.F.R. Part 55: Fair Access to Financial Services (OFFSITE LINK) -Office of the Comptroller of the Currency
• OCC Finalizes Rule Requiring Large Banks to Provide Fair Access to Bank Services, Capital, and Credit (OFFSITE LINK) -OCC
• Fair Access to Financial Services Proposed Rule, 11/25/2020 (OFFSITE LINK) -Federal Register
• HR 2743: Fair Access to Banking Act
• States Require ‘Fair Access” to Financial Services-Sullivan & Cromwell, LLPStates with Fair Access to Financial Services Laws
  Florida:  FL ST § 655.0323(5). FL HB 989 Section 37
  Tennessee: Tenn. Code § 45-1-128(a); TN HB 2100 Section 1

Credit Discrimination

• 15 U.S. Code Chapter 41 – CONSUMER CREDIT PROTECTION (OFFSITE LINK)
• 15 U.S. Code Subchapter IV – EQUAL CREDIT OPPORTUNITY
• 12 C.F.R. Part 1002 – Equal Credit Opportunity Act (Regulation B) (OFFSITE LINK)
• 12 C.F.R. Chapter I – CHAPTER I—COMPTROLLER OF THE CURRENCY, DEPARTMENT OF THE TREASURY
• 12 C.F.R. Chapter X – CHAPTER X—CONSUMER FINANCIAL PROTECTION BUREAU
• 12 C.F.R. § 128.2 – Nondiscrimination in lending and other services.
• 12 C.F.R. § 128.3 – Nondiscrimination in applications.