What Documents Will I Need for a Mortgage?

Documentation is crucial to getting a mortgage loan. If you’re applying for your first mortgage, you might feel overwhelmed by the amount of paperwork you’re asked to provide. But if you know what lenders expect, you can prepare early and submit your information in a timely manner. The sooner we receive the necessary paperwork, the sooner you can get pre-approved for a mortgage and start shopping for a home.

Here’s a list of seven documents you’ll likely need when applying for a mortgage loan.

1. W2s and pay stubs

Your W2s and pay stubs are proof that you’re currently employed, and they also let us know how much you’re currently earning.

This information determines whether your income is consistent and stable, and it helps us gauge how much you can afford to spend on a property. If you don’t have your most recent W2, ask your employer to provide another copy.

If you’re self-employed and don’t receive pay stubs, be prepared to provide a year-to-date Profit and Loss statement for your business. Talk to your accountant or tax preparer to get one.

2. Tax returns

Be mindful that you’ll also need to submit copies of your completed federal tax returns for the past two years when applying for a mortgage.

This might seem a bit redundant since you’re also submitting W2s and pay stubs, but a review of your tax returns confirms the accuracy of the information on your W2. Plus, this allows our underwriters to review business deductions (if you’re self-employed), which could affect your qualifying amount.

Tax returns are also used to confirm other sources of income such as retirement/pension, alimony, child support, etc.

You can read our blog about what are the items mortgage lenders look for on your tax return?

3. Bank and other financial statements

It isn’t enough to say you have sufficient cash reserves for a down payment and closing costs. We must verify these funds and their source. So, don’t be surprised when we ask for copies of your bank statements from the past couple of months. This includes checking account statements, savings account statements, as well as statements for other assets like retirement accounts.

We’ll review these accounts to see how much you have in reserves and check to see how long these funds have been in your account. If a large sum of money recently appeared in your account out of nowhere, you’ll have to explain where the money came from. This is important because you must follow specific rules when a relative provides your down payment and/or closing costs funds.

4. Gift letter

If a relative will provide your down payment and/or closing costs as a gift, you’ll have to provide a gift letter.

Gift money is typically accepted as a source of funds, but it must be accompanied by a formal letter from the donor. The letter must include the size of the gift or dollar amount and the date you received funds. It must also include the donor’s personal information like their name, address, and telephone number, and it should describe their relationship to you. And most importantly, the donor must state that funds are a gift and not a loan. Typically, you cannot borrow funds for a down payment or closing costs.

5 Rental history

You might also need to provide information about your rental history since this information doesn’t appear on your credit report. This is when your landlord writes a letter stating that you’ve made on-time rental payments, and in some cases, you may need to provide canceled checks to verify the rental payments you’ve made.

6. Identification

We must also confirm that you are who you say. You’ll need to provide your state-approved personal identification, such as a passport or driver’s license.

7. Credit report

You don’t provide your own credit report, but you must give authorization for a credit check. From here, we’ll see your credit score and information about your past and current debts (balances owed, payment history, credit limits, etc.). This information also plays a part in determining your qualifying amount.

Before giving authorization, please be sure about your Credit Score and if needed, correct it for avoiding the rejection.

Here you can read more about how your Credit Score can affect your Mortgage Rate.

Bottom Line

This is by no means an exhaustive list, so you may be asked to provide additional documentation based on your circumstances. This might include bankruptcy paperwork if you’ve had a discharge in the recent past, as well as a divorce decree to confirm how much you receive, or pay, in alimony or child support.

If you have any questions about preparing for a mortgage, feel free to give our loan experts a call.

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