Gathering the correct documentation is one of the most tedious parts of buying a home, but a little prepping can make it much more manageable.
The required documents for a mortgage application can be classified by type: Proof of Income/Employment, Proof of Assets, Credit History, and Residential History. These documents give your potential lender a look into your situation, so they can determine if you’re a worthy borrower or not. We’ve put together a comprehensive mortgage application checklist to help you get prepared for the lending process.
As to be expected, income plays a vital role in a lender’s decision-making process. Several documents are required to prove you can afford the payments.
- Tax Returns. Many lenders require at least two years of tax returns and W-2s to demonstrate income stability.
- Pay Stubs. Lenders typically ask for pay stubs from the last 30 days to establish how much you’re currently making or have made in the past.
- Alternative Forms. Other sources of income such as child support, disability, social security, et al. might require verification via direct deposit information rather than a pay stub.
- Employment Letter. This will confirm your hire date and employment status for additional guarantees that you’re honest about what you do.
- Employer Contact Information. Some lenders may request a contact list containing company names and addresses, former supervisors, HR representatives, and contact information.
Lenders look at asses to determine how much cash you would have available if something happened and you couldn’t pay for the mortgage. They will request the following documentation as proof of your assets:
- Bank Statements. To prove what is deposited and taken out of your account every month, lenders will require bank statements covering the previous 30-60 days.
- Proof of Property. Be prepared to provide proof of ownership if you own another home or property.
- Gift Letters. A letter the proves money given to you is a gift solely to pay for your new home and not a loan.
Credit & Other Information
- Credit History. Lenders will want to verify you’ve been consistent with your payments to know that you’re trustworthy and able to undertake another significant monthly expense responsibly.
- Credit Report. A lender will pull your credit report to prove your creditworthiness.
- Residential/Renting History. This is beneficial if you do not have extensive credit history and required if you’ve never owned a home.
- Proof of Rent Payments. Some lenders may request evidence from previous landlords that you have made on-time payments. You’ll need either printed or digital files of physical statements from your landlord or housing office.
- List of Previous Addresses. Plan to provide a list of all your previous addresses. If applicable, you will also need to present the names of past landlords and their contact information.
Preparing these documents in advance can help keep stress levels lower, and you’ll likely have a better experience than walking into the home-buying process empty-handed.