If youre a first time homebuyer, then the process can seem overwhelming. This video series, presented by Chase Home Lending, translates relatable experiences into tips and tools that equip you for every step of your homebuying journey.
The mortgage application process is an important one and a little preparation can make it less stressful. The key is getting organized and rounding up paperwork early on to ensure a smooth loan closing.
Taking out a mortgage to buy a new home is an exciting milestone But before you can close on your dream property, you’ll need to complete one very important step – documenting your finances for your lender.
Providing the right paperwork confirms you meet the lender’s guidelines and can repay the mortgage. While it can seem daunting, going in knowing exactly what documents you need simplifies the process.
In this comprehensive guide, we’ll outline the key documents you should expect to provide when applying for a home loan
Overview of Home Loan Documentation
When reviewing a mortgage application lenders need to verify
- Your income and assets
- Credit history and scores
- Employment status
- Previous housing payment history
This gives them a complete picture of your finances to assess if you qualify and can manage the new monthly mortgage payment.
You’ll provide some of this info directly on the loan application. The rest comes from collecting documents that back up, expand on, and confirm what you listed.
Having all documents ready ahead of time prevents delays. Expect your lender to request:
Identification Documents
- Driver’s license/ID
- Social Security card
- Passport
Income Verification Documents
- Pay stubs
- W-2s
- Tax returns
- Profit/loss statements
Asset Verification Documents
- Bank statements
- Investment account statements
- Retirement account statements
Credit History Documents
- Credit report
- Credit score
- Previous mortgage statements
- Rental payment history
Let’s explore the specifics of what you’ll need in each category.
Identification Documents
Lenders are required to verify your identity and legal residency status. At minimum, you’ll need to provide:
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Valid driver’s license or state ID: Must show your current home address.
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Social Security card: Required for credit checks and employment verification.
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U.S. passport: Provides both ID and evidence of citizenship/residency for non-citizens. The closer to expiration, the more lenders may request additional ID.
Without these key documents, lenders can’t move forward due to Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements. Have legible copies ready to go.
Income Documentation
For lenders, confirming your income sources and amounts is crucial to assessing affordability. Expect requests for:
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Pay stubs: Most recent 30 days of pay stubs demonstrate your current salary.
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W-2 forms: W-2s for the previous 2 years further verify your stable income history in a role.
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Tax returns: Personal federal tax returns for the past 2 years give insight into your full income picture, including any additional sources beyond your core salary.
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Profit and loss statements: If self-employed, lenders will want to see recent P&Ls for your business to evaluate ongoing profitability.
Provide every page of requested statements, even blank pages, to give the full context. Consistently demonstrate the income you stated on your application.
Asset Documentation
You’ll also need paperwork showing you have funds available for the down payment, closing costs, and reserves post-closing. Key documents include:
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Bank statements: 2-3 months of statements for checking and savings accounts used for funds. Show consistency of balances over time.
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Investment account statements: Brokerage, stock, and bond account statements to tally your non-retirement investment assets.
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Retirement account statements: 401(k) or IRA/Roth IRA account statements if using for down payment. Retirement funds can only be accessed for certain exceptions.
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Gift letter: Signed letter from family/friend gifting you funds, if applicable. Gift documentation requirements vary by lender.
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Home Equity Line of Credit (HELOC) statements: If using a HELOC for down payment, 12 months of account statements.
Having fewer large deposits and minimal recent account changes helps streamline documentation. Keep accounts tidy prior to applying.
Credit History Documentation
Your credit report and scores help lenders gauge repayment risk. Be ready to provide:
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Credit report: Authorization for lender to pull your credit report from the 3 main bureaus.
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Credit scores: Your scores from each bureau will be calculated based on your full history of credit usage.
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Previous mortgage statements: Details on payment history for any prior home loans.
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Previous rental payment verification: Show reliable history of on-time rental payments.
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Bankruptcy/foreclosure documents: If applicable, supply documents around past bankruptcy or foreclosure.
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Letters of explanation: Briefly explain any red flags or discrepancies in your credit history.
Robust credit documents prevent any delays from questions arising down the line.
Additional Home Loan Documents
Depending on your specific situation, a few other documents may come into play:
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Divorce decree: If receiving/paying alimony or child support that helps qualify you.
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Home insurance quote: Demonstrates you’ve shopped for coverage you’ll need as a homeowner.
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Homeowners association documents: If the property is part of an HOA, provide docs with insight into fees.
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Purchase contract: Copy of your signed contract and any addendums for the home.
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Home inspection report: Provides full disclosure around the property’s condition.
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Appraisal: Lender’s appraisal assessing the market value of the home.
Compiling this full paperwork package is vital for your home loan application’s success. Lean on your loan officer for guidance to prevent any missing documents.
How to Organize Your Home Loan Documents
With such an extensive list of paperwork, organization is key. Some tips:
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Create labeled folders/envelopes for each document category, such as “Tax Returns” or “Bank Statements”.
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Scan/copy documents to have digital versions handy. But most lenders also require original physical copies.
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Use a loan checklist provided by your lender to track progress completing your document package.
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Submit documents efficiently via your lender’s online portal or carefully packaged physical copies.
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Follow up on any outstanding items your lender flags as still needed. Don’t let things slip through the cracks.
Thorough preparation makes the home loan documentation process infinitely smoother.
The Bottom Line
Providing complete, accurate documents is crucial for loan approval. Expect you and your co-borrower to supply:
- Identifying documents
- Income verification
- Asset documentation
- Credit history reports
- Any additional paperwork
With an organized system and diligent gathering, you can tackle the document collection process with less stress. Your dream home awaits!
Mortgage loan documents checklist
The mortgage lender will want to verify that you have a steady source of income and the ability to make monthly payments. Heres what to expect:
- Names and addresses of employers: Make sure to provide the complete name and mailing address. If you work for a large company that has departments in various locations, contact human resources and ask what address should be provided for employment verification.
- W-2 income tax statements for the last two years: You should be able to find copies attached to your tax returns. If you filed taxes electronically, you or your tax preparer should have an electronic copy in your records.
- Form 4506-C: The mortgage banker will give you this form to complete and sign, which gives authorization to access your tax return.
- Pay stubs: Printed copies or proof of direct deposit, reflecting a minimum of 30 days of income.
- Social Security: A copy of the award letter must be provided along with a recent check stub or copy of a bank statement if deposited electronically through direct deposit.
- Disability payments: Form SSA-1099 for disability income for the two most recent tax years.
- Pension income: A check stub and any forms showing duration of payments.
- Maintenance income: Proof of alimony, child support or separate maintenance income if you would like for it be considered as a basis for repaying the obligation.
- Tax returns: If you own a business, the lender will need the most recent two years of personal tax returns and any business returns you filed for your company (for example, 1120, 1120S, Schedule K-1/1065).
- P&L: Year-to-date business profit-and-loss statement for current year if more than three months have passed since the end of the tax year.
Include all pages and schedules. The lender does not need copies of your state returns.
Fixed debt: Payments and balances for credit cards, mortgages, home equity lines of credit, outstanding student loans, auto loans, alimony, child support or any other fixed-debt obligations.
- Statements: Bank statements for the last three months, including savings, checking and investment accounts. Be sure to copy all pages of your statements. If you dont receive paper statements, print your entire online statement. Dont forget to include all of your accounts (checking, savings and investments). The accounts must show that you have enough money to afford your down payment and several mortgage payments.
- Gifts: For gift funds, include a gift letter and evidence of transfer or withdrawal. You will need to provide a detailed letter to explain any large deposits or withdrawals.
- Stocks: Stocks and securities account statements for the last three months.
- Closing Disclosure: Youll need the settlement statement if using funds from the sale of property.
- Sale of assets: proof of ownership, proof of sale and proof of funds transfer.
This information can be found in income tax returns for the last two years verifying rental income. Provide leases if possible.
Brokerage statements: Provide documents for the last two years. Schedule B interest and dividend income (most current statement to ensure underlying deposits still exist and are earning at the same level).
Staying ahead can be one simple way to alleviate tension when working through the mortgage process. By preparing early, youll have more time to gather documents that may be missing or harder to track down.
Take the first step and get preapproved.
These articles are for educational purposes only and provide general mortgage information. Products, services, processes and lending criteria described in these articles may differ from those available through JPMorgan Chase Bank N.A. or any of its affiliates. The views expressed in this article do not reflect the official policy or position of (or endorsement by) JPMorgan Chase & Co. or its affiliates. Views and strategies described may not be appropriate for everyone and are not intended as specific advice/recommendation for any individual. Information has been obtained from sources believed to be reliable, but JPMorgan Chase & Co. or its affiliates and/or subsidiaries do not warrant its completeness or accuracy. You should carefully consider your needs and objectives before making any decisions and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results. For more information on available products and services, and to discuss your options, please contact a Chase Home Lending Advisor.
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Mortgage Documents (What Do You Need To Apply?)
FAQ
What does a bank need to approve you for a home loan?
What information do they need for a mortgage application?
What documents should be included in a bank account?
The accounts must show that you have enough money to afford your down payment and several mortgage payments. Gifts: For gift funds, include a gift letter and evidence of transfer or withdrawal. You will need to provide a detailed letter to explain any large deposits or withdrawals.
What documents do you need to get a mortgage preapproval?
Here’s a checklist of the essential documents: 1.**Personal Identification**: To verify your identity, you’ll need a government-issued ID with a photo.Acceptable forms include a state-issued driver’s
What documents do you need before closing a home?
Closing is the final step in your homebuying journey. You’ll see some of the most important mortgage documents in this step, like your closing disclosure, homeowners insurance, loan application documents, deed and title. You’ll typically receive a closing disclosure three business days before you close.
What documents do I need to buy a home?
The type of document and requirements may vary by state or loan type. For example, in some states you may use a security deed and in other states a deed of trust. The documents may be physical or electronic. Each milestone of your mortgage and homebuying journey comes with a set of documents pertaining to that step.