August 22, 2019

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Will I Need To Fill Out IRS Form 4506-T To Buy A Home With An FHA Loan?

Will I Need To Fill Out IRS Form 4506-T To Buy A Home With An FHA Loan?

When you fill out FHA home loan paperwork to purchase a home, your lender may ask you to complete IRS Form 4506-T, Request for Transcript of Tax Return. What is the purpose of this form and how does it affect your FHA loan?

What Is IRS Form 4506-T Request for Transcript of Tax Return?

The official site of the Internal Revenue Service says that the purpose of this form is twofold. One use is so that a transcript may be ordered free of charge, and the other use is to give permission to a third party (in this case, your participating FHA lender) to receive the transcript instead.

Why Does My FHA Lender Need My Tax Information?

The lender is charged with verifying the borrower’s income and employment as part of the FHA loan approval process. Reviewing tax records is one way of verifying income.

What Information Is Available Through IRS Form 4506-T?

The IRS official site says that tax data from the following forms may be included in the request:

  • Form W-2
  • Form 1099
  • Form 1098
  • Form 5498

State/local tax information is not included with W2 information.

How Long Does It Take To Get This Tax Information From The IRS?

Most requests will be processed within 10 business days according to the Internal Revenue Service official site.

Is My Data Secure During This Process?

The IRS has revised its’ form and submission procedures, stating that, “Financial data will remain fully visible to allow for tax preparation, tax representation or income verification. Because the full SSN is masked, the IRS has created an entry for a Customer File Number. A 10-digit Customer File Number is selected by the requester and entered on a new Line 5b of Form 4506-T and 4506T-EZ.”

Do All FHA Loan Transactions Require This Form?

Lender standards and requirements will play an important part in the verification process. Some FHA home loan transactions, such as those for self-employed borrowers, will require tax information from the IRS in order to verify the self-employed income’s stability and likelihood to continue.

Other transactions may require less documentation; it’s safe to assume that the tax information needed will be requested on a case-by-case depending on circumstances.

Joe Wallace - Staff Writer

By Joe Wallace

October 29, 2018

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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