Just doing some calculations here. In applying for a loan, how many years of income is looked at or averaged? I ask because in the last 3 years, one year was a loss of income. First and last year both positive net income. Do loan officers look at your most recent income alone, meaning last year, or last 2 years. Or will they look up to 3 years? Also for a business owner, does your gross income play any factor or only the net income is looked at? please advise. Thanks.

@Mike Ojo You need 2 years tax return. Net income will be taken in consideration for DTI purpose. If you have reason which can be prove by paper trail why there was negative income and your ytd income showing you will have better year than previous year you can get exception.

@Mike Ojo You need at least two. If one was bad, give them 3. They are looking for proof of income, especially if you have business / investment income. The good news is, they will tell you exactly what you need.

Originally posted by @Mike Ojo :

Just doing some calculations here. In applying for a loan, how many years of income is looked at or averaged? I ask because in the last 3 years, one year was a loss of income. First and last year both positive net income. Do loan officers look at your most recent income alone, meaning last year, or last 2 years. Or will they look up to 3 years? Also for a business owner, does your gross income play any factor or only the net income is looked at? please advise. Thanks.

 Your profile says "serial entrepreneur," so I'm guessing best bet is two years of federal tax returns.

There are scenarios where 1 year, 3 years, and 0 years are required. But I'm guessing yours will be 2. Fannie Mae's or Freddie Mac's automated underwriting system is going to look at the full scenario, including your credit report, down payment, assets saved on top of that, income, etc etc, and call out how many years it wants. We ask for 2 upfront as standard because that covers ~95% of scenarios.