No matter if you’re purchasing your first home or an experienced real estate investor, there are a variety of documents required when applying for a mortgage. Some are standard requirements for all applicants while others may be more specific to your individual situation.
Income Documents
Lenders want to verify your income is stable and reliable before they approve you for a loan, so they will likely request W-2 forms and tax returns from both employers you currently work for and those in the past. If you’re self-employed, they may also request copies of your last two years’ tax returns.
Bank Statements
Lenders typically request bank statements covering at least two to three months, as well as your checking and savings account numbers. These documents verify your income and demonstrate how much is owed in debts such as credit cards, auto loans and student loans.
Social Security Card
Be sure to maintain a copy of your Social Security card at work and bring it with you when meeting with lenders for verification purposes. Doing this helps the lender confirm that they’re lending money to the right person, helping prevent fraudulence.
Other Personal Documents
You might need to present the lender with copies of your driver’s license or ID card, passport, birth certificate and other forms of identification. These documents verify your identity and help the lender match up your photo with that on the driver’s license or ID card so they know exactly who they’re lending money to.
Gift Letters
If you’re receiving a large sum of money from family or friends to put towards your down payment, lenders will require a gift letter from the giver confirming why and how it will be used. This letter should provide all relevant details regarding why and how the gift was given.
Debts List
Make a list of all your debts, such as auto and student loans, credit cards, child support and alimony payments. This will enable the lender to calculate your debt-to-income ratio–an essential factor when determining if you can afford your mortgage.
Tax Returns
Make sure your tax returns are ready when applying for a loan; either keep them at home or order them online from your CPA, tax service or Internal Revenue Service (IRS).
Depending on your lender and loan program you’re applying for, additional documentation may be needed. These requirements vary by lender and loan product, but all serve to verify that you are qualified as a borrower and not engaging in fraudulence.
Verifying Your Identity
When applying for a home loan, you’ll need to show valid government-issued identification such as a driver’s license, state ID card or passport.
Disclosure of all financial information is essential, as failing to do so could delay the mortgage approval process and may result in a lower credit score or higher interest rate. Getting pre-approved for a loan is an excellent way to determine what you can afford before searching for a home.
