Applying for Mortgage: 2012 income was low -- File extension to "avoid" year???

[Ken Sanders]

I'm looking to purchase a home with a conventional mortgage in a few months. My income for 2010 and 2011 were very good and 2013 will be my best year yet, however 2012 wasn't good at all. I'm debating whether or not to file an extension for my 2012 taxes in the hope that a prospective lender will then ask to see my 2010 and/or 2011 tax returns instead. Is this realistic, or will they ask for something else?

[Joel Owens]

If you filed extensions and owe IRS taxes the lender will use the repayment plan monthly amount to count against your DTI ratio.

If you corp shows a bunch of income and you are a sole member then the lender can use the income from the business in certain situations.

Basically the 9 to 5 people that are leveraged to the hilt with a regular job can get a loan and lose their job at any second. However a business that writes down income for tax purposes gets penalized for not wanting to pay a government that can't manage 10 cents a bunch of money.