When you're ready to apply for a mortgage, it's important to be prepared. Mortgage lenders want to know the full story of your financial situation, so they'll ask for a variety of documents. These documents can include pay stubs, W-2 forms, tax returns, bank statements, and more. To help you get started, here's a quick guide to the types of documentation you might need when applying for a mortgage loan. To begin with, most mortgage lenders want to see your tax returns for the past two years.
If you haven't yet filed a tax return for the most recent calendar year, your lender may ask you to do so before you file the application. And if you live in a state with income taxes, the lender will likely want to see your federal and state returns. Additionally, you may need to sign Form 4506-T, which allows the lender to request a copy of your tax returns from the IRS. Your lender may also ask for proof of income in the form of pay stubs or W-2 forms. This is to ensure that your annual income matches the income reported through the pay stubs and that there are no large fluctuations from year to year.
If you are self-employed or have other sources of income (such as child support), you may need to show your lender proof using 1099 forms, direct deposits, or other means. To confirm that you are who you say you are, your lender may ask you for some type of identification, such as a driver's license. Additionally, they may ask for bank statements and other documents that show your current financial situation. This helps them get a clear picture of your overall financial health. If you have other assets that could help you qualify for the mortgage or that you plan to use for a down payment, be prepared to document them and their current market value. If you're currently a renter, you'll need to provide the landlord's contact information, as well as documentation (such as canceled checks) showing that you've paid the rent. Finally, lenders often request documentation that shows how much money you have in reserve.
This is to ensure that you have several months of reserve mortgage payments in your account in case of emergency. Ultimately, it's best to wait and take the time to improve your credit before submitting any mortgage application. Applying for a mortgage will require a lot of paperwork; make sure you know what to prepare before you apply. With that in mind, here's a quick guide to the types of documentation you might need when applying for a mortgage loan.