Getting a home loan is a big deal. For many of us it’s something we’ve either never done before or do so rarely that it’s hard to recall the process. To make getting your home loan a little easier, we’ve made a list of the documents you should have when you apply for a home loan.
What Do You Need To Prove?
There is actually quite a bit of variation in which specific documents you may need to provide when applying for your mortgage, but there are five main categories of proof you will have to provide. We will describe the kinds of documents you can use to prove these points by category later in this blog.
- Income – From work, investments, and any other sources
- Assets – In the bank, in retirement and investment accounts, etc.
- Identity – You must prove who you are to qualify for a loan
- Credit History – You have to authorize a credit check
- Housing history – You have to demonstrate a responsible history
In order to assess your ability to pay back a home loan reliably, it’s necessary to evaluate your total income. To accomplish this, several documents are required. First, no matter your work situation, you will need to provide federal income tax returns. This is actually pretty straightforward. All you need to do is fill out and sign Form 4506-T to authorize the lender to request your tax return history from the IRS.
This by itself will likely not suffice to prove income, though. If you’re employed, you will be asked for your most recent W-2 forms or other proof of income such as pay stubs. If you’re self-employed or have other sources of income that aren’t reflected on a W-2 like child support, you should provide evidence of two years of income such as 1099 forms, letters or contracts from clients, and possibly even a balance sheet certified by a CPA.
In order to verify that you can make the necessary down payment and are solvent enough to cover your financial obligations, you must demonstrate that you have assets for this purpose. Typically there are three documents that may be required for this verification: bank statements, retirement and investment accounts, and potentially a “gift letter” if you’ll be receiving financial assistance from someone else.
If you have other assets, such as cryptocurrency, or commodities like gold, it may be worth providing documentation to prove this. It won’t necessarily be taken into account in all cases, but it can only improve your position.
Federally recognized photo ID is a must. Either your driver’s license or passport is perfectly adequate, but it’s worth making absolutely certain you have your ID available and that it’s current. If your address or name has changed since your ID was issued, or it has expired, you should update it before applying.
You will need to authorize us to check your credit history. This allows us to assess your income-to-debt ratio and see your history of timely payments. This is one of the most essential parts of the process when applying for any kind of credit. The better your credit score, the better the terms and conditions you can receive on your home loan.
If you’ve been renting, you should be prepared to offer evidence that you’ve paid your rent on-time and in full. Canceled checks or receipts demonstrating your payment history will allow us to verify both that you can afford to make housing payments, and that you do so in a responsible manner.
If you already own a home, you may want to provide evidence of timely mortgage payments, if you’re going through a different lender than for your last home loan. Home ownership with a clean payment history is a good general sign for banks and mortgage lenders that you’re responsible enough to purchase a home and keep up with payments.
- A signed copy of the purchase and sale agreement – This should disclose the sale price and any terms agreed upon between you and the seller.
- Bankruptcy or foreclosure records – If you’ve been foreclosed on or declared bankruptcy you will have to disclose this information.
- Divorce Decree – If you’ve been divorced, you should bring your divorce agreement, including any alimony or child support you’re owed or have to pay.
- ID for Non-citizens – If you aren’t a citizen of the US, you may need to provide a copy of your green card, work authorization, or other evidence that you are legally living in the US to secure a home loan.
- Alternative Credit Proof – Especially if you have little or no official credit history, you may want to provide alternative evidence of timely and reliable payment history. Your lender might be willing to consider payment history on utilities such as electric, phone, cable, and internet as evidence of a good payment history.
Peace Of Mind
Perhaps the most important thing you can get out of being thoroughly prepared to apply for your home loan with all the relevant documents is peace of mind. It takes some courage to put yourself out there and apply for a home loan. Hopefully, some insight into what the process requires from you will help you feel more confident and relaxed about the process as a whole.
Integrity Mortgage is here to help you get into the home of your dreams. Whether it’s your first home, a home to house your growing family, or you’re investing in real estate, we are an experienced lender and we want to make your dream a reality. Contact us today to find out more about the home loan process and how we can get you into your new home. Ready to apply? Follow this link here to get started!