Documents You’ll Need for a Mortgage
What you'll learn: Mortgage loan document checklist, documentation best practices, common questions
EXPECTED READ TIME:5 MINUTES
If you're in the market for a mortgage, you'll need to provide documentation to verify your income. While the specific documents required can vary depending on your income sources, type of loan, and whether it's a purchase or refinance, there are some common documents that every borrower should prepare.
In this article, we'll go over the key documents needed for a mortgage loan, as well as tips for preparing them correctly. By following these guidelines, you can help speed up the loan process and increase your chances of approval.
Documentation rules
When preparing your mortgage loan documents, it's important to follow a few rules to ensure that your application is complete and accurate:
- Provide complete documentation: Having written documentation of all income sources is important for a mortgage application. Make sure you provide all of the documents requested by your lender. Missing documents can delay the application process.
- Be truthful: Income for mortgages must be written and documented. Never provide false information or documentation. If you don’t count income on your taxes, you can’t use it for a mortgage application.
- Keep documents current: Your lender may require updated documents throughout the loan process, so be prepared to provide current versions as needed – especially if the home buying process is taking longer than a few months. Most lenders require the documentation to be from the last four months.
Mortgage loan documents checklist
So, what documents are needed for a mortgage? Here's a list of the most common documents required:
- Proof of income: Recent pay stubs, W-2s, and tax returns. For self-employed borrowers, profit and loss statements and business tax returns may be required.
- Asset statements: Checking and savings, investment, and retirement account statements from the past few months.
- Employment verification: Verification of your employment, including your job title, length of employment, and income. Lenders will look for consistent and documented income in the same line of work for at least two years.
- Identification: A copy of your driver's license or passport.
- Credit report: A credit report will be obtained as part of the mortgage application process.
- Other documents: Additional documents may be required depending on your circumstances, such as divorce decrees, child support orders, bankruptcy paperwork, or award letters and proof of deposit for social security or pensions.
Documentation best practices
Preparing your documents needed for a mortgage correctly is crucial for a successful loan application. Here are some best practices to follow:
- Organize your documents: Keep all of your income documents in one place, such as a folder on the desktop of your computer. Label them consistently, such as Name-Date. For example: W2-2022, Personal Taxes-2022, or SS Awards Letter-2022.
- Provide complete documents: Ensure your income documents are complete and show all necessary information, such as your name, the pay period, and the year-to-date totals. If a document has multiple pages, they all need to be in one file. Include all pages, even if some are blank.
- Explain any unusual income: If you have income from non-traditional sources, such as from a side job, rental, or boarder income, be prepared to provide additional documentation and sometimes an explanation letter to support it.
- Ensure every document is 100% readable: If it’s hard to read, the underwriter will probably ask for another copy, which can slow down the process.
Frequently Asked Questions
Here are answers to some of the most common questions about what documents are needed for a mortgage.
Q: What documents are needed for a mortgage refinance?
A: Besides the general documents outlined above, you’ll need a current mortgage statement and homeowners insurance declaration page.
Q: What documents do I need for a VA loan?
A: In addition to the list above, you’ll need your DD-214 so your lender can request your Certificate of Eligibility (COE).
Q: How do my documents differ if I am self-employed?
A: Self-employed applications need to supply business and personal taxes. You'll also have to sign a 4506-C so the lender can get a transcript of your taxes from the IRS and verify the information on your tax return. You'll also need a profit and loss (P&L) statement signed by the business owners.
Q: How do I document boarder income?
A: Fannie Mae requires documentation of the boarder's history of shared residency, such as a copy of a driver's license, bills, bank statements, or W-2 forms, with the boarder's address matching the borrower's address. You also must include documentation of rental payments for the past 12 months.
Q: Will I need to submit all of the above documents for preapproval?
A: It depends on the lender; however, most lenders will ask for you to submit your documents right away for a more accurate preapproval.
Gather your paper trail
Documenting your income for a mortgage can seem daunting, but by following these guidelines, you can make the process smoother and increase your chances of getting approved. Make sure to gather all the required documents, follow the documentation rules, and use best practices when scanning and submitting your documents. By doing so, you'll be one step closer to owning your dream home.
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