Paperwork is a big part of getting a home loan. When talking with a lender, everything will go much smoother if you have the documents they need to process your loan.
Your lender will need to see your most recent tax return. This includes all the different pages and schedules, not just the 1040 form. Your lender is making sure that you have not committed fraud. They will:
Typically, you will need just the most recent year. However, for some loans, or if you are self-employed, you may need 2 or more years of returns. If you haven’t filed a return for your business, you’ll need to show a profit and loss statement.
Most lenders want to see two years of W-2s or 1099s. These forms help your lender see that you have been honest about your earnings. They can also see if your earnings are stable.
Although your tax returns can tell a lender about your past earnings, your paystubs can tell them about your current earnings. That is why you will need to take in three months worth of paystubs. Be sure to give the lender a copy and not the originals. For those paid online, your paystubs are usually available on your company’s website.
Your assets are the things you own. Showing your assets will help the lender determine if you have the money needed for your down payment. Keep in mind that most loan programs require that a down payment is not a gift from family or friends. Your assets will also let lenders see that you have the ability to get through tough financial times. They are looking for buyers that have more than the bare minimum required for buying a home.
Be sure to bring titles and statements that can prove what your assets are worth.
In addition to needing to know what you earn and what you own, your lender needs to know your debt. For each debt you provide, they will also need the monthly payments. Debts include:
You need to provide documentation showing the amounts owed so that your lender can determine your debt-to-income ratio. Lenders want to see ratios of 36% or less.
You will need statements, canceled checks, or a landlord letter showing that you’ve made your rent or mortgage payments over the last year. Lenders like to see that you’ve got a good history of past payments.
The first six documents on this list are typically needed by every lender. However, different lenders and different loans can require different documentation. Here are a few other documents you may need to provide in order to get a mortgage loan:
Having your documentation ready will make the loan process go more smoothly. If you don’t have the right documents, getting them to your lender quickly is key to keeping the process moving. If you have questions about the lending process, feel free to contact us.