When you apply for a mortgage, you'll need to supply the lender with several documents to verify your debts, income and assets. These documents will be used to calculate how much you can afford to borrow. Only verifiable sources of income may be used in this calculation, so it's important to be thorough and keep good financial records. When supplying debt verification, any debt that will be paid in full within six months need not be included.
If you're a first-timer, the process can be overwhelming. It pays to find out what you need in the way of paperwork well before you start applying for loans. The exact types of documentation required may differ slightly between lenders, and depending on your specific situation.
- Names and addresses of your employers for the last two years (including the dates of your employment, and your gross monthly income).
- W-2s and/or federal income tax returns for the last two years.
- Pay stubs for the last 30-60 days.
- If you're self employed - financial statements, including year-to-day profit and loss statements, and balance sheets. These must be prepared by an accountant and signed by both the accountant and you. You must also supply tax returns for the last two business and personal years.
- If you have 25% or more ownership in a Corporation or Partnership - two years of tax returns, current profit and loss statements, and balance sheets.
- Supporting documentation for any other income that you want to be considered towards qualifying for the loan. This may include dividends, child support payments, social security, disability or pension income, and rental property income. Supporting documentation may include check stubs, bank statements, brokerage statements, or tax returns. In the case of alimony and child support, you must supply evidence that the payments have been received for at least twelve months, and that payments are scheduled to continue for a minimum period of time (which the lender may specify). Bonuses and overtime payments may be included if you can verify that they are regular sources of income.
- Bank statements or passbooks for the last three months for any assets you wish to include in the calculation. This may include checking and savings accounts, credit unions, mutual fund and IRA or 401(k) accounts, and security accounts (including stocks, bonds, and life insurance).
- The titles of cars you own, if they are less than five years old.
- If you are receiving a monetary gift to put towards the cost of the mortgage, you must supply a confirmation letter from the giver.
- The most recent statement or payment booklet for all present creditors (must include the name of the creditor, their address, and the number and balance of the account).
- Car loans, student loans, and credit card accounts, including balance owed.
- Verification of current mortgage, or rent payments, including the last twelve months worth of cancelled mortgage or rent payments.
- Verified copy of any divorce or separation agreement if alimony or child support is applicable.
- Explanatory letters for any delinquent credit records.
- If applicable - copy of bankruptcy proceedings, including Petition for Bankruptcy, Schedule of Bankruptcy, and Discharge of Bankruptcy, and an explanation letter of the circumstances leading to bankruptcy.
- If you're selling a home, you must provide its contract of sale and HUD-1 closing statement before closing on your new property.
- If you're building a new house, you'll also need to supply a set of house plans and a cost breakdown, the construction contract (signed by you and your contractor), references for your contractor, and a copy of the settlement statement and title of the lot you have purchased.