The documents and forms required for a home loan differ by loan type, state, and situation. For example, being self-employed requires different documents that working for a company.
Most lenders can get a good sense of your approval odds by reviewing your W-2 forms, and tax returns.
Below is a list of the most common documents required to get a home loan:
1. Tax returns
In order to get a complete look at your financial situation, you will likely need to sign FORM 4506-T to allow lenders to request your tax returns from the IRS.
Most lenders are looking at two years of tax returns to make sure your annual income is consistent with your pay stubs and reported earnings. They also are looking at consistent earnings.
2. Proof of income
Lenders usually ask for your pay stubs, 1099, direct deposit stubs for the past month, sometimes longer. The tax returns help give them a clear idea of what your financial condition is while pay stubs and direct deposit receipts are used to determine current earnings.
3. Bank statements and other assets
Lenders request bank statements and copies of other assets such as life insurance, and any other investment assets to determine if you have enough reserve cash in case of an emergency. Lenders are also checking to make sure that your deposits have cured for a few months and have not recently been deposited.
4. Credit history
Lenders will pull your credit history with verbal or written permission.
You should be prepared to offer explanations for any bad credit reported. If you already know about it have a written statement prepared when the lender tells you they need to request your credit history. Sometimes this helps lenders consider one-time unavoidable situations differently than habitual delinquency.
- Gift letters
If a friend or family member helps you buy a house by giving you money you will need to provide written documentation that the money is indeed a gift. It is a good idea to provide the relationship as well.
6. Photo ID
To prove who you are you need to provide a photo ID.
7. Renting history
If you are a first-time buyer and you have been renting, lenders may request for a year’s worth of canceled rent checks. As an alternative, they may ask you, landlord, to provide documentation you paid all your rent on time. Your rental history will carry more weight if you have a limited credit background.
Bottom line
Your lender needs all the documents as soon as they request them.
You will need to provide all the information you can about your assets, debts, income and credit history. Your lender will provide a list of the exact documents they will need.
