Not necessarily a problem, as long as you're still inside the IRS extension window for that year (extensions generally run through mid-October). The agencies key documentation off the return you were required to have filed as of your application date. When the most recent year is legitimately on extension, the lender documents the extension itself (Form 4868) along with the prior years' filed returns. For self-employed borrowers, the lender will also want profit-and-loss support for the unfiled period, typically a year-end P&L for the unfiled year and often one through the most recent closed quarter, to confirm the business still supports the income shown on your filed returns. The exact P&L combination depends on your loan program and what automated underwriting asks for, so confirm it before you start shopping. We've had self-employed borrowers on extension actively buying property. Two things make it smoother: - Be consistent. The P&L income should line up reasonably with the pattern from your prior filed years. A sudden jump or drop invites questions. - Keep the extension paperwork handy. If you're past the extension deadline and simply haven't filed, that's a bigger obstacle, because the file can't lean on a return that's legally overdue. Tell your loan officer up front which years are filed and which are on extension, and they can map the paperwork before anything stalls underwriting.