- Lenders need to look at your income, assets, credit, and debt before qualifying you for a mortgage.
- Be prepared to provide pay stubs, W-2s, tax returns, bank statements, and any other documentation proving you have the ability to repay the loan.
- Having your documents ready ahead of time can help the process go more smoothly.
To complete your mortgage application, you'll need to provide a lot of documentation. Your mortgage lender will go through your financial history with a fine-tooth comb to ensure that you can afford to pay back the money you're borrowing.
"Although the process of submitting paperwork to process your loan can feel laborious in today's fast-moving, competitive homebuying market, the documentation you submit for the underwriting process can have a major impact on how long it takes to process your loan," says Michael Innis-Thompson, Head of Community Lending and Development at TD Bank.
What documents are needed when applying for a mortgage?
Lenders want to ensure that you have sufficient income, credit, and assets to qualify for a mortgage loan. So you'll be asked to provide any documentation that backs that up.
Before you start the process to get a mortgage, try to have your documents ready to go ahead of time. This will help things move more smoothly.
Additionally, if you can provide documentation during the mortgage preapproval process, you may look better to sellers when making offers on homes, since your finances have already been verified. Ask your lender if they offer an underwritten preapproval option.
"The most prepared buyers — those who have their paperwork in order and can enter a contract with ease — are most attractive to sellers," Innis-Thompson says.
The exact documentation you'll be asked for will vary depending on your situation. At a minimum, expect your lender to ask for the following:
- Proof of income such as pay stubs
- Tax documents including W-2s and tax returns
- Proof of other income you rely on, such as Social Security income or child support payments
- Statements for your financial accounts, including bank, investment, and retirement accounts
- Gift letters if you're receiving funds from family to help cover your down payment
- Your home purchase contract
You may need to provide other types of documentation as well, such as profit and loss statements if you're self-employed or your rent payment history if you're a first-time homebuyer.
Proof of income for a mortgage
The exact income documents your lender will request depends on your situation. Self-employed borrowers, for example, will need to provide different documentation than someone who receives a W-2 as a full-time employee.
You may not have to dig up all these documents yourself. Some lenders have technology that can pull certain information on your behalf.
If you're borrowing with someone else, such as your spouse, remember that you'll both need to provide these things.
Recent pay stubs
Lenders want to see that you have a steady and predictable source of income. To prove this, they will typically want at least the last month of pay stubs for both you and your spouse or co-borrower.
W-2 forms and tax returns from the past 2 to 3 years
If you work a salaried job, your lender will want copies of your W-2 forms for the last two to three years, as well as copies of your tax returns, which show the total income made for your household during those periods.
If you're a freelancer or contractor, you likely won't have W-2s. Instead, you can submit 1099s or, if you're a business owner or self-employed, a profit and loss statement for your company. Your lender will likely request bank statements, too.
Proof of additional income (e.g., alimony, bonuses, etc.)
You'll need to submit proof of any additional income you receive regularly as well. This might include alimony, child support payments, or Social Security income, for example. You can use your Social Security award letter or your legal agreement/court decree as proof for these items.
Proof of down payment and other assets
Your lender will need to see proof of any money you have access to, as this impacts what they'll be willing to loan you and how much monthly payment you can afford. You'll usually need to provide:
Bank statements
You will need to hand over at least two months of bank statements for both your checking and savings accounts. This shows your lender that you have enough saved for your expected down payment and closing costs.
If you're required to have reserves, meaning you need some money left over to show you can afford to make your payments for a certain number of months, they'll look for that, too.
Investment and retirement account statements
If you plan to use funds from a brokerage account or retirement plan toward your purchase, you'll need to show statements for those accounts as well.
Gift letters
If a relative is gifting you some cash to help with your home purchase, you'll need to provide a down payment gift letter. This is a signed letter from the person gifting you the funds certifying that you aren't expected to repay them.
Information on the property you're buying
Lenders also need to know about the property before they will agree to loan you money for it.
Purchase agreement
Once you've made an offer on a house and the seller has accepted, your real estate agent will draw up a sales contract, called a purchase agreement, with the details of your deal. You'll need to give this to your lender, so they can approve the loan amount and closing date.
Additional documents you might need for your mortgage application
Your lender may need additional documents, depending on your specific situation. They may request:
Divorce decrees, bankruptcy filings, etc. (if applicable)
You'll need to provide documentation of any official court filings or decisions that impact your finances. This can include divorce, separation, child custody battles, bankruptcy filings, and more.
Rental history (for first-time buyers)
If you're currently a renter, your lender might want proof that you have a history of paying your rent on time. Be prepared to provide information about your rental history for the last year. This might include showing canceled rent checks.
Other steps of the mortgage application process
A lot goes into approving a borrower for a mortgage. Here's what else you can expect to happen when you apply for a mortgage.
Fill out an application
First, you'll fill out an application. This means completing the Uniform Residential Loan Application, a standardized form that lenders use to gather a borrower's personal and financial information. It's sometimes referred to as the Fannie Mae Form 1003 or Freddie Mac Form 65.
As you complete your application, you'll be asked to provide:
- Personal information, like your Social Security number or Individual Taxpayer Identification Number, citizenship status, and contact information
- Employment and income details, including the name and contact information of your employer so the lender can verify that you work there
- A list of your financial assets, including bank accounts and investments
- Information on debts or other liabilities you owe, including monthly payment amounts and current balances
- Property details for both the home you're buying and any other real estate you own
- Other sources of funding you'll be using, such as a gift from a relative or a down payment assistance grant
You may also be asked to provide some sort of government-issued ID, such as a driver's license or state ID.
Debt and credit check
Lenders will look at your credit report to see what debts you owe and your repayment history on those debts. The monthly payment amounts on these debts will be used to calculate your debt-to-income ratio.
For this step, you'll give your lender permission to pull your credit. These credit checks typically come with a small fee you'll pay at closing.
They'll also make sure your credit score meets their minimum requirements.
Explanation of credit history issues, if any
If there are any blemishes on your credit report, you may be able to explain these in a letter and submit it to your lender. For example, if your high credit card balance isn't due to bad spending habits but instead, a scammer who stole your credit card number, you might want to explain this to your lender so it won't impact your mortgage chances.
Other obligations
If you have other monthly debt obligations, such as alimony or child support you're required to pay, you may be asked to provide proof of these as well. A copy of the court decree or legal agreement will usually work in these scenarios.
Receive a loan estimate
Within three days of submitting your application, your lender will provide you with a loan estimate. This document outlines the terms of your loan, your mortgage interest rate, your monthly payment amount, and how much cash you'll need to bring to closing.
This document is standardized across all lenders, making it easy for you to compare offers from multiple companies. Aim to apply with at least three different lenders to be sure you're getting the best deal.
Get an appraisal
Your mortgage lender won't just evaluate you — it will evaluate the home you're buying as well. This means getting a home appraisal, which ensures that the home is worth what you're paying for it.
Go through underwriting
After you've submitted your application, it will go through the underwriting process. This is where the lender will look closely at all that information and documentation you submitted and make sure you can handle taking on the loan.
While you're going through underwriting, be prepared to answer requests for additional documentation. The faster you can get the underwriter what they're asking for, the sooner you'll receive a decision on your application.
If everything checks out and your application is fully approved, you'll be cleared to close, meaning you're ready to close on the loan.
Lock your rate
You'll also be able to lock in your mortgage rate at some point in this process. You can lock your rate early on if you're worried that rates will rise, or you can wait until you're closer to closing to lock. Work with your loan officer to figure out what makes the most sense for you.
Check mortgage rates
Documents needed for mortgage application FAQs
Do I need to provide proof of homeowners insurance before getting a mortgage?
Yes, lenders typically require proof of homeowners insurance to protect their investment in the property.
How recent do my financial documents need to be?
Most lenders require financial documents, like bank statements and pay stubs, to be from the last two to three months to ensure they reflect your current financial situation.
What documents do you need for mortgage preapproval?
Mortgage preapproval, which happens before you start making offers on homes, may not require much or any documentation, depending on the lender. If you get an underwritten preapproval, you'll need to provide the same documents you would with a regular mortgage approval.
Can gifted funds be used as part of the down payment?
Yes, you can use gifted funds as part of a down payment, but you'll need a gift letter from the donor stating that the funds are a gift and not a loan.
What's the significance of the sales contract in the mortgage process?
The sales contract outlines the agreed-upon price and conditions of the sale. It's a critical document that the lender needs to finalize the loan amount and terms.
