What Documents Do You Need For Mortgage Pre Approval?

13 January 2023

If youre looking to get a mortgage, there are some documents you will need. Getting preapproved is important, because it lets you shop for a home and gives the seller confidence that youre a serious buyer.

Most lenders want to see one or two years of tax returns and W-2 statements, along with pay stubs. This information can help them make an accurate assessment of your financial health and your ability to repay a loan.
What Documents Do You Need for House Loan Pre Approval?

In a competitive housing market, its important to get mortgage pre approval before you start looking at houses. A preapproval letter can help you show sellers that youre a serious buyer, which can help them take you seriously and make a better offer on your home.

A mortgage lender will need a few documents to give you a mortgage preapproval. These include your social security number, financial information and loan details. The lender will also pull a credit report to determine your credit score and credit history.

Once the lender has a full picture of your finances, theyll issue you a preapproval letter that indicates how much they think you can afford to borrow. This doesnt mean you can buy a house at that price; youll still need to make an offer and submit a formal contract for approval.

Lenders typically want to see your income documentation for preapproval and underwriting, which includes your most recent pay stubs, W-2s or tax returns. They may also request additional income documentation, such as 1099s from your freelance work or investments.

Other types of documents needed for a mortgage preapproval include bank statements and investment accounts. These documents will help your lender see if you have sufficient reserves for a down payment and mortgage payments in the future.

If you have any previous bankruptcy or foreclosures, lenders will likely ask for documents about them as well. They might also require rental documents, such as canceled rent checks or proof that you paid your landlord on time for the last year.

Many mortgage lenders also pull your credit report to determine how risky a borrower you are. This may involve pulling a copy of your credit report from each of the three major credit-reporting agencies, called a tri-merge.

During this process, the lenders underwriter will review your loan application and supporting documents to ensure that you meet all necessary guidelines.

Getting preapproved can be quick and painless, but its still a good idea to be prepared with all the documents your lender needs. Most of these are standard for all borrowers, but there are a few exceptions that require additional paperwork.
Employment Verification Documents

Lenders use the employment verification process to verify a home buyer’s income and ability to afford monthly mortgage payments. The verification process is designed to prevent potential home buyers from buying a house that they can’t afford, which would result in defaulted loans or foreclosures.

Most lenders require a letter from your employer to verify that you’re employed and to show that you have regular income. The letter should include your position within the company, your salary or wage, and a phone number where you can be reached should there be any questions.

Getting an employment letter can be pretty simple. Most employers have an outline on file for this purpose and you should be able to get one from them without any trouble.

The lender will typically need to know if your job is full-time or part-time, how many hours you work per week, and how long you’ve been working there. They may also want to know if you receive any additional income from sources outside of your employment, such as alimony or rental income.

Even though the mortgage process can be complex, most lenders have solid processes in place to ensure that your employment information is verified correctly and timely. They may call your employer, send them a form or email them a request.

If you’re self-employed, this can be a little more complicated as it can be hard to prove your income. The best way to handle this situation is to use Argyle Verify, which can help you securely share your income and employment information with any number of parties.

Another common problem for self-employed people is that they can’t easily provide a copy of their tax return to the lender. You can obtain this information from the IRS by filling out a Form 4506-T.

As with all things in the loan process, it’s important to keep in mind that the verification process can take weeks or even months. This means that if your employment letter is more than 60 days old, you will need to send it in to the lender as soon as possible.
Income Verification Documents

Getting pre-approved for a mortgage is an essential step to securing the home of your dreams. It lets you know that the lender is willing to lend you a loan based on your income, debt-to-income ratio and other criteria. It also shows sellers that you are a serious homebuyer who is likely to close on the property.

Aside from credit checks, lenders usually ask for several documents to verify a borrower’s employment and income. The list includes pay stubs, W-2 forms, tax returns and other documents that verify the amount of income you make.

If you’re self-employed, a separate list of documents is needed to prove that you’re not working for free or with an employer who doesn’t provide regular pay stubs. This may include tax returns for the past two years, as well as 1099 forms, contract work agreements and other proof that you’re employed or running a business.

Lenders are also looking for steady, consistent income from a variety of sources to avoid the risk that a homeowner will be unable to make payments on the loan one day. Using the information from these documents, lenders will be able to determine whether or not you have a stable income that’s likely to last until you’ve paid off your mortgage.

You’ll probably be asked to send in a copy of your recent tax returns, as well as a copy of your most recently issued W-2 form for each person on your mortgage application. If you receive any kind of supplemental income from government programs, including unemployment and workers compensation, you’ll also need to send in these documents.

Your bank account statements and investment accounts are also important to lenders as evidence of your income. You’ll need to submit two months’ worth of statements for every bank and investment account you use on your mortgage application, as well as for your checking and savings accounts.

These documents are necessary to verify that you have enough assets to cover your monthly mortgage payments in the event of a financial emergency, which can include losing your job or experiencing a medical emergency. You can also show lenders that you have liquid assets in your checking and savings accounts, such as cash in your savings or money market account.
Credit Report

A credit report is an important document to have when applying for a house loan. It contains information about your credit accounts, payment history and other aspects of your financial life that can affect your ability to get approved for a mortgage loan or pay off the loan at a lower rate than you expected.

You can get a free credit report from each of the three major credit reporting agencies once a year. It is a good idea to check your credit report before you apply for a house loan and periodically afterward, so that any inaccurate or incomplete information is corrected before it has a negative impact on your credit score.

When you apply for a house loan, a lender runs a hard credit check on your credit report. This is a type of credit inquiry that can negatively impact your credit score, but its usually short-lived and will drop off your credit report after two years.

The lender might also request your social security number and other personal identification documents to confirm that you are who you say you are. This is important because if you arent who you say you are, the lender cant perform a credit check and might not be able to approve you for the loan.

Once youre pre-approved, the lender will send you a three-page document called a loan estimate that details your mortgage type and loan terms, your interest rate, estimated payments, and closing costs. It will also specify a maximum loan amount based on your credit and financial profile.

Getting pre-approved for a house loan is a good way to start your home search. It allows you to see what you can afford and gives you the confidence that you are a serious buyer. It can also help you make offers on homes more quickly, since a seller is likely to consider your offer more seriously if they know that you are qualified for a mortgage loan.

The mortgage process often takes a few months, so its best to seek pre-approval six months to one year in advance of your serious home-buying plans. This will give you more time to fix any issues that might prevent you from being preapproved or to save up for a down payment and closing costs.