Documents Required For Your Loan

Loan Application Information Required

The first thing you’ll do when applying for a mortgage loan is complete a mortgage application.  Regardless of whether the application is in the paper format linked here, an online form, or done verbally with your loan officer, this linked document contains the application with the information you’ll need to provide, including:

• Full name, birth date, Social Security number, and phone number
• Marital status, number of children and ages
• Residence history for at least two years. If you’re a renter, your rent payment is needed. If you’re an owner, all mortgage, insurance and tax figures are needed for your primary residence and all other properties owned.
• Employment history for at least two years, including company name(s), address(es), phone number(s), and your title(s).
• Income history for at least two years. If you receive commissions, bonuses, or are self-employed, you must provide two years of bonus, commission, or self-employed income received. Most lenders average variable and self-employed income over two years.
• Asset account balances including all checking, savings, investment, and retirement accounts.
• Debt payments and balances for credit cards, mortgages, student loans, car loans, alimony, child support, or any other fixed debt obligations.
• Confirmation whether you’ve had bankruptcies or foreclosures within the past seven years, whether you’re party to any lawsuits, or you co-sign on any loans.
• Confirmation if any part of your down payment will be borrowed

Loan Documentation Required

Next comes the step of verifying all the information provided in the application with documentation. A lender will provide a checklist based on your specific profile, but you can generally expect the following:

• • Written (or sometimes verbal) authorization for your lender to run your credit report.
  • Letters of explanation for credit inquiries, past addresses, and derogatory information on your credit report.
  • If you’ve had a bankruptcy in the past seven years, discharge papers are required.
  • If any tax liens or other derogatory items on your credit report require further explanation, you’ll be required to provide full documentation for each derogatory instance.
  • If you’re a renter with a private landlord, 12 months of canceled rent checks or 12 months of bank statements to show rent checks cleared on time. If you’re a renter with an institutional landlord, your lender can sometimes get them to complete a form confirming on-time rent payments in lieu of canceled checks or bank statements.
  • If you’re keeping your existing home and renting it out, you’ll need to provide a lease agreement and proof that the first month’s rent has been deposited into your bank account.
  • If you intend to sell your existing home before closing on the new home, you’ll need to provide a listing agreement for the home, and it will need to close before your new home can close.
  • Pay stubs for at least 30 days.
  • W2 forms for all jobs worked in the past two years.
  • All pages of personal federal tax returns for the past two years.
  • If self-employed or greater than 20 percent owner in a company, all pages of business federal tax returns for past two years.
  • If self-employed or greater than 20 percent owner in a company, a year-to-date profit and loss statement for the business.
  • Income from rental properties can typically only count if it’s on your tax returns. If rental income isn’t on your tax returns yet because the rental property is new, lenders may accept the income if your rental property down payment was 30 percent or greater. Ask your lender.
  • If you’re divorced and receiving (or paying) child support or alimony, a divorce decree will be required, and this income typically must be scheduled for at least three more years from the time of loan closing.
  • Most recent two months statements for all checking, savings, investment, and retirement accounts. You must include all pages even if a page says “intentionally left blank” or you think there is no relevant information on certain pages.
  • If you move money among accounts, you must provide all accounts even if you’re only using one account for the down payment, because the lender will review every line item on two months of full account statements and ask you to paper-trail large deposits and withdrawals.
  • If you’re receiving gift funds, your lender will require all donors and receivers to sign a gift letter verifying the gift isn’t a loan. Some lenders want to see the donor’s accounts for verification of the donor’s ability to gift, and some only want to see the funds being received in your account. And for further reference, here are specific rules for sourcing down payment and closing funds. 

Sourcing a Down Payment

When you purchase a house, you will likely have to put a large sum of money down as your down payment. Most loan programs require you to put down 3 percent or more of the value of your house in cash.

In order for your loan to be approved, your lender will have to analyze and document the source of your down payment. On conventional loans, the borrower must have a minimum of 5 percent of their own funds as a down payment. Lenders want to make sure they can identify any large deposits into your accounts to ensure that the funds aren’t borrowed funds that do not show up on your official credit report. They also want to ensure that your debt-to-income ratio (or DTI) is accurate before they qualify you for a loan. Funds borrowed on an unsecured basis (credit cards, personal loans, etc.) are not allowed as down payment

Checking and Savings Accounts

Your lender will typically want to see the previous 2-3 months’ statements for your checking and savings accounts. Your lender will verify the location and source of your down payment. If your statements have any large or unusual deposits the lender may ask you to explain what they are and document where they came from. Make sure if you are transferring money from one account to another that you can provide a paper trail to document these transfers.

Stocks, Bonds, Mutual Funds, 401k or Other Retirement Accounts

Your lender will likely want to look at your overall assets, which include any stocks, bonds, mutual funds or retirements account you may have. If you plan on liquidating any of these assets as part of your down payment you must document the sale of the asset as well as the transfer of funds.

Some people utilize a monetary gift from their parents or other family members to help them buy a house. If any of your down deposit is from a gift, your lender will require the donor to sign a “gift letter.” This letter will state your relationship with the donor, their contact information, the address of the property that will be purchased, the amount of the gift and the source of the gift.

Most importantly, the donor will have to state that the gift funds are a gift and not a loan, i.e., the money is not required to be repaid. The lender is also interested in making sure the donor has no interest in the sale of the property (they are somehow related to the seller, an agent, builder, etc.).

You will also have to document the withdrawal and transfer of gift funds. This would likely be in the form of a canceled check, bank statement or confirmation of wire transfer. As of 2016, people may gift a maximum of $14,000 during the calendar year before being subject to tax implications.

Different Types of Documentation needed for BANK STATEMENT LOANS

• • 12 to 24 months of personal or business bank statements to show cash flow
  • Two years’ history of self-employment
  • A Credit Score that is good (the exact score you need will depend on your lender) Typically at least over 580.
  • Enough cash or other liquid funds to cover several months of your mortgage payments, minimum 10% down.
  • Proof of any liquid assets, such as a 401(k) or investments
  • Your business license if you have one
  • A letter from your accountant (or the person who does your taxes) proving your business expenses and stating that you file your tax returns as an independent contractor.