1. January Pay Stubs Rarely Meet The Guidelines

Early January pay stubs almost never represent a complete 30-day income picture. That’s not an underwriting opinion — it’s just math. And the guidelines require that the paystub used represents a full 30

Underwriters aren’t trying to be difficult. They’re trying to confirm:

• Pay frequency
• Consistency
• And no “debts” are hidden on the paycheck that are not on the credit report
  
  

The solution (if you can’t get a VOE):

Include the last  December 2025 pay stub to complete the picture along with the January paystubs

When paired correctly, a December 2025 pay stub plus early January 2026 pay stubs gives underwriting exactly what they need — and avoids back-and-forth conditions that cost time.

2. W-2 Timing Matters More Than the Calendar on the Wall

January creates confusion because everyone expects new W-2s to exist immediately. In reality, employers are not required to issue W-2s until January 31, 2026.

That timing matters.

What income documentation is acceptable depends on the application date, not wishful thinking.

Here’s the practical framework for early-year files:

• Applications dated  in January 2026 can still rely on 2025 and 2024 W-2s
• Applications dated Feb 1st or later in 2026 now rely on 2025/2024 W-2’s

When teams understand this, conditions get cleaner and borrowers feel less whiplash from document requests that seem arbitrary. January  underwriting isn’t about “new year, new docs.” it is about knowing what your borrower may or may not have when!

3. Self-Employed Income: Matching Years Still Matters

Self-employed income doesn’t get a January pass. One of the most common slowdowns in early 2026 files is mismatched tax documentation — mixing years that don’t belong together. 

• •  2024/ 2023  1040’s and business returns acceptable
  •  2025 1040’s are not allowed to be filed until Feb 1st and will take days /weeks to process 
  •  2025 / 2024 are allowed after Feb 1st (and you confirmed the IRS has accepted the 2025)

The personal return vs business return issue

Personal and business tax returns must align by year.  We often get the question, my borrower has his business returns done but not their personal returns so can I just use 2025 business returns?

While it may be true that the business returns are finalized (per the IRS due March 15th) , underwriting guidelines always reference and go off of the personal returns filed. Keep in mind the mortgage is not for the business, it is for the borrower.  They  may have completed “a business return” but what if they have 3 businesses,  four rentals,  trust income, and alimony?  When you submit your loan to the investors it is all about the 4506T confirming the personal returns (which then proves the business returns are also done)!

For borrowers who have not yet filed 2025 returns, underwriting will rely on 2024 and 2023, supported by year-to-date P&Ls when required by their guidelines. For government loans you must have P/L’s anytime that last personal returns is more than one quarter old.  This same rule  Fannie and Freddie don’t “require” this like FHA but is a great practice!

The mistake happens when teams try to “help” by submitting partial updates that actually create inconsistencies.

Why the Zone of Confusion Never Really Goes Away

 Payroll cycles lag.
Tax forms take time.
Borrowers assume “new year” means “new paperwork.”
Underwriting still needs proof, not assumptions.

The teams that move fastest in January aren’t the ones chasing the newest documents — they’re the ones assembling the clearest story using what already exists.

Income calculation isn’t about speed.
It’s about accuracy, context, and consistency.

Clear those three, and January becomes just another month.