To get the best negotiating position in a seller’s market, it’s best to obtain mortgage pre-approval before house-shopping. Lenders require a full and accurate picture of your financial position for mortgage pre-approval, which means a variety of documents are required. These are 20 of the most important documents needed for mortgage pre-approval.
Here are 20 Documents Needed for Mortgage Pre-Approval
Your income verification documents are the most important documents needed for mortgage pre-approval. These will determine if you are approved and how much you are approved for. Since so much depends on income verification, several types will be required.
You’ll need W-2s for at least two years prior to pre-approval. If you’ve changed jobs in that time, you might need additional documents to show your employment is stable.
2. Pay Stubs
Pays stubs are generally required for the previous month or two. This shows your regular income week to week, while your other documents show your annual income.
3. Previous Taxes
In addition to your W-2, collect the taxes you’ve filed from the last two or three years. This gives a more holistic picture of your income status.
4. Other Income
If you are self-employed, earning rental income, or another form of income, you’ll need additional records to show this. Tax records such as 1099 forms are most useful.
Documents Showing Debt and Expenses
Income isn’t the only factor determining your financial picture; debt and expense documents will also be needed for mortgage pre-approval. These can be summarized in an itemized list of monthly expenses, but be sure to include verifiable proof of each one.
5. Credit Cards, Student Loans & Car Loan
If you’re paying off a card or a loan, you’ll need to show how much you regularly pay. Gather previous statements that show how much you’ve been paying, how much is left to pay, and the creditor’s information.
6. Existing Mortgage Statement
If you’re managing a second mortgage, you’ll need to provide information on your existing mortgage. If you’re current with your mortgage, this can improve your position.
If you’ve previously filed for bankruptcy, you can still get pre-approval, but these records will be required in the documents needed for mortgage pre-approval.
8. Child Support or Alimony
If you make regular child support or alimony payments, include these in your list of itemized monthly payments, as well as payment records.
Credit History Documents
The lender will certainly run a credit check, which will require you to verify your identity and give permission for a credit check.
9. Social Security Number
To successfully run a credit check, your lender will need your social security number, and may need to verify it with your social security card.
10. Driver’s License
The lender will probably make a copy of your driver’s license for further verification of your identity.
11. Permission and Signature
You’ll need to sign a statement allowing the lender to check your credit score.
Residence History Documents
Your history with your current residence can affect your pre-approval. These documents needed for mortgage pre-approval will vary depending on where you currently live.
12. Current Residence
Your lender will need to know where you currently live and how long you have lived there. If you’ve recently moved or you’re selling your house and buying another, you’ll want to disclose this.
13. Rent Payments
Show that you’re current on your rent payments or ask your landlord to provide a record of previous payments.
14. Property Taxes
If you own a home, property tax records will help to show what you’ve paid and that you are not behind.
Records of your assets further demonstrate that you have the means to make a down payment and keep up on the mortgage payments. Gather records that show what your assets are worth and when you acquired them.
15. Bank Accounts
These statements are especially important documents needed for pre-approval. Your checking, savings, and other accounts will show whether you can cover a downpayment.
16. Home Value
If you currently own a home, show how much you still owe on it, the purchase price, and assess the property value. If you recently sold or plan to sell your home, this will be especially important.
If you have stocks, trust funds, retirement accounts, a vacation home, rental property, or other investments, provide records of them. This will further demonstrate your stability as a borrower.
Other Documents That May Be Required for Pre-Approval
If there is any confusion about where your downpayment or income comes from, or if there is uncertainty about your expenses or living situation, additional documents will be needed for pre-approval.
18. Gift Letter
In some cases, family members or friends may help with the downpayment or mortgage payments. If this is the case, you’ll need a gift letter, which may need to be notarized, showing where the money came from.
19. Marriage or Divorce Records
Both marriage and divorce mean a significant change in your financial position. If your marital status has recently changed, these documents will be needed for pre-approval.
20. Foreclosure Records
If your home has previously been foreclosed, you’ll need to include these records. This won’t necessarily prevent pre-approval, but you’ll need to show how your situation has changed.
Although this may seem like a lot of documents needed for mortgage pre-approval, a mortgage is a big investment. The more documents you have prepared, the more clear your financial picture will be, making pre-approval easier. The documents required for your mortgage pre-approval will vary from other homebuyers. That's why it's important to work with a qualified mortgage lender to ensure that you have the correct mortgage documents prepared for your unique situation.