An applicant is likely required to provide tax returns for the past two years if income is reported from?

When an applicant reports income from commissions, it is common practice for lenders to require tax returns for the past two years. This is because commission-based income can vary significantly from month to month and year to year, depending on sales performance and market fluctuations. By reviewing two years of tax returns, underwriters can assess the stability and average of the applicant's commission income, providing a more reliable basis for evaluating the applicant's overall financial situation and ability to repay a mortgage.

While other types of income such as overtime and bonuses may also require documentation, commissions are particularly variable and require more scrutiny. Therefore, verifying this income through tax returns ensures that lenders have a clear understanding of the applicant's earning patterns, which is crucial for loan approval. This practice helps to mitigate risk for lenders while ensuring that borrowers are not over-leveraged based on potentially inconsistent income streams.