What Information do I Need to Apply for a Home Loan?

If you’re planning on applying for a mortgage, it’s never too early to start collecting your financial documents. Lenders need many documents to process your mortgage application, along with important information on your debts and earnings.

The precise forms and information you need to apply for a home loan are contingent on your situation. For instance, a self-employed individual will likely have to show different forms than a company-employed individual.

The following list can give you an idea of what documents you may need to collect for your application.

What You Need to Apply for a Home Loan

Are you ready to begin the journey towards homeownership? Congratulations! Here are some documents that you may need for your home loan application.

Tax Returns

You need to give your lender the full story of your financial situation. To do that, you will need to provide your tax returns. Your lender may ask you to sign a Form (4506-T). This form enables them to request a duplicate of your tax returns from the Internal Revenue Service (IRS). Or, if you have your tax returns on hand, you can send them to your lender directly. Many lenders have a secure online portal that allows borrowers to send over documents directly.

Generally, lenders want to evaluate 1-2 years’ worth of tax returns. They want to make sure that your annual income is steady and that you will be able to repay the loan amount.

Credit History

Your lender will ask for your written or verbal permission to obtain your credit report. This helps your lender assess the associated risks involved with your loan, if any.

Bank Statements and Other Assets

Your lender might request to have a copy of your bank statements and proof of assets. This may include your investment assets and life insurance.

Your lender asks for these documents in order to gain assurance that you will be able to make your mortgage payment. They also check to see that your down payment has been in your account for some time and didn’t just show up suddenly.

Photo ID

You will most likely need to provide a copy of your photo ID, such as a driver’s license. This is used to verify your identity and confirm that you are who you claim to be.

Proof of Income

Your lender may require salary statements or pay stubs from the last 3 to 6 months as proof of income. Tax returns give them an understanding of your overall financial health whereas pay stubs enable them to gauge your current income. If you have other income sources (like child support) or are self-employed, you might need to provide 1099 forms or other documents.

Wrapping Up

The more you can do to prepare for the application process, the easier it will be. Make sure you have all the necessary information and documentation. When your lender asks for something, try to get it to them quickly. This will help make the process go smoothly.