What Documents Do I Need to Prepare for Mortgage Pre-Approval?

Getting pre-approved for a mortgage is an exciting step toward buying a home! But it’s also a step that requires gathering some important documents to help your lender understand your financial situation. Having these documents ready will make the pre-approval process smoother and faster. Below is a checklist of common documents you might need, but remember—every borrower’s situation is unique! Not all of these may apply to you, depending on your employment status, loan type, or even the kind of property you’re buying.

Checklist of Common Documents for Mortgage Pre-Approval

1. Proof of IncomePay Stubs: Typically, lenders will ask for your last two to three months of pay stubs to see a record of your income.
   Tax Returns: Most lenders ask for your last two years of tax returns to verify your income history, especially for salaried or hourly workers.
   W-2 Forms: Along with your tax returns, your W-2 forms from the last two years show your annual income and help the lender confirm your employment.
   
2. Proof of Additional Income
   If you earn income outside of a regular job (like freelance work, alimony, or rental income), you’ll need to provide documentation for this as well. This might include:1099 Forms for contract or freelance income
   Alimony or child support documents (if you choose to include it)
   Lease agreements if you receive rental income from investment properties
   
3. Bank StatementsPersonal Bank Statements: Lenders typically ask for two to three months of bank statements to verify your savings, checking account balances, and recent deposits. They look for a consistent balance and no sudden large deposits that might indicate new, untraceable debt.
   Business Bank Statements: If you’re self-employed, lenders may also ask for a few months of business bank statements to help verify your income.
   
4. Credit Report and Debt InformationCredit Report: Lenders will pull your credit report to review your credit history and score. Be prepared to explain any issues or unusual items on the report.
   Monthly Debt Statements: You may need to provide statements for any outstanding loans, such as credit cards, car loans, or student loans. The lender uses this to calculate your debt-to-income ratio.
   
5. Proof of AssetsSavings and Investment Accounts: You’ll need to provide statements for any savings, investment accounts, or retirement funds. This can show lenders you have extra funds that could be used for your down payment or as reserves.
   
6. IdentificationGovernment-Issued ID: A photo ID, such as a driver’s license or passport, is typically required for identity verification.
   
7. Employment VerificationLenders may contact your employer to confirm you’re currently employed and to verify your salary or hourly pay. If you’ve recently changed jobs, you might need to provide additional documentation about your employment history.
   

Additional Documents for Special Situations

As mentioned, every borrower’s situation is unique. Here are a few examples of when additional or different documents might be required:

• Self-Employed Borrowers: Self-employed applicants often need to provide two years of tax returns, profit and loss statements, and sometimes bank statements. However, if you’re applying for a loan that doesn’t require tax returns—like a bank statement loan—you may only need your bank statements to verify income.
• Borrowers with Rental Properties: If you’re buying an investment property or have rental income, the lender may ask for a lease agreement and proof of rent deposits in addition to your own financial documents.
• Alternative Income Verification: If you’re applying for a specific type of loan that doesn’t require tax returns, you might provide alternative documents. For example, some lenders allow “asset depletion” loans, where they use your assets (like retirement accounts) instead of traditional income.

Why Being Organized Helps

Having these documents organized and ready can speed up the pre-approval process and make things easier for you and your lender. Remember to talk to your lender about which documents are truly needed for your situation and loan type, as they can guide you on exactly what applies to you.

Final Tips

• Double-Check for Accuracy: Make sure all information in your documents matches exactly what’s on your application.
• Keep Documents Handy: Lenders may ask for updated documents as you move through the process, so keep everything together and easy to access.

By gathering these documents in advance and working with your lender to make sure you have what’s needed for your unique situation, you’ll be one step closer to getting pre-approved—and ready to make an offer on your dream home!