Per the W2-1099 transcript guide in the coop

W2 Employee
Salary / Hourly Employee
Borrowers who have less than 25% business ownership **

Who CAN do 1099 Transcripts:

Social Security Income borrowers

Who CANNOT do W2/1099 Transcripts?

Commission only borrowers
Self-Employed borrowers
1099 Employees – Non Social Security
Using any Other Income that is not on the W2 **
Borrower’s working in their family’s business **
Borrower’s using Rental Income **

Loan Types, Products & Investors:

W2s & 1099 transcripts are not allowed on USDA, CHFA, IHFA, OHFA or non-conforming
See attached Investor grid

** You will not get a pop-up error stopping you from choosing the transcripts on all situations – you will need to reference the product guides or this reference guide to know when you can and cannot use the W2 or 1099 transcripts **

NOTE – At Underwriter discretion, full tax transcripts may be required based on a loan’s circumstances. At that time, the Processor will modify the Request for Transcript of Tax Return form, request borrower signature(s) and order the full transcripts

Original question:

I have a potential borrower that is showing a small loss on his 2016 return from a side business he runs (schedule C annual loss is less than $500). His primary income is W2'd from his employer ($60,000+). For FHA would we need a copy of the 2017 tax return and 1040 tax transcripts?