In a NutshellDepending on your financial situation, there are several documents you might need when you apply for a home loan, including your tax returns, pay stubs, bank statements and credit reports.
If you’re applying for a mortgage, it’s a good idea to start prepping your financial documents.
Lenders will request paperwork for your mortgage application that proves things like how much money you make and your debts. The exact forms you need for a home loan depend on your situation. For example, someone who is self-employed will likely have to provide different forms than someone who is employed by a company.
A lender can get a good sense of your likelihood of being approved by checking out your recent pay stubs, bank statements, W-2 forms and tax returns. Depending on your financial situation, here are seven mortgage documents you might need when applying for a home loan.
- Tax returns
- Pay stubs, W-2s or other proof of income
- Bank statements and other assets
- Credit reports
- Gift letters
- Photo ID
- Renting history
1. Tax returns
Mortgage lenders want to get the full story of your financial situation. You’ll probably need to sign a Form 4506-T, which allows the lender to request a copy of your tax returns from the IRS.
Lenders generally want to see one to two years’ worth of tax returns. This is to make sure your annual income is consistent with your reported earnings through pay stubs and there aren’t huge fluctuations from year to year.
2. Pay stubs, W-2s or other proof of income
Lenders may ask to see your pay stubs from the past month or so. Your tax returns help give them a clear idea of your overall financial health, while pay stubs help them gauge your current earnings.
Lenders generally ask for documentation of other income streams, such as spousal support or child support payments, Social Security benefits, investment or rental income, and income from a business or side gig.
You may need to show your lender proof of income through 1099 forms, direct deposits or other means.
3. Bank statements and other assets
When assessing your risk profile, lenders may want to look at your bank statements and other assets. This can include your investment assets as well as your insurance, such as life insurance.
Lenders typically request these documents to make sure you have several months’ worth of reserve mortgage payments in your account in case of an emergency. They also check to see that your down payment has been in your account for at least a few months and did not just show up overnight.
4. Credit reports
The type of mortgage loan you may qualify for partly depends on your credit history and credit scores.
Here’s what you should know about credit requirements for different loan types.
- Conventional loans — Conventional mortgage loans are not part of a government mortgage program. You’ll likely need a FICO® score of at least 620 to be approved for a conventional loan. And your score might need to be at least in the mid-700s to qualify for a competitive interest rate.
- FHA loans — These government-backed loans require credit scores of at least 500 to be approved, and your credit scores affects the size of the down payment you have to make. If your score is between 500 and 579, you’ll need a 10% down payment. With a score of 580 or higher, you may be able to put down as little as 3.5%. But keep in mind that lenders can impose stricter standards on top of the basic rules for FHA loans, so the standards can be higher in some cases.
- VA loans — VA loans don’t require a certain credit score to qualify, so lenders can decide on minimum scores for themselves. Lenders may be more likely to overlook low credit scores if you’re applying for a VA loan than if you’re applying for a conventional loan.
- USDA loans — The USDA doesn’t set a minimum credit score, but lenders may have their own minimum requirements.
- Jumbo loans — Credit score requirements for jumbo loans are usually stricter than for other conventional loans because of their large amounts. You may need a score in the low- to mid-700s or above to qualify.
5. Gift letters
Your friends and family might help you buy a house by giving you money. If that’s the case, you’ll need to provide a written confirmation the money is indeed a gift and not a loan by writing a gift letter.
The documentation should list their relationship to you as well as the amount of the gift.
The documentation should include the following information:
- The name, address and phone number of the person giving the gift
- How you’re related to the person giving the gift
- The amount of the gift
- The date you received the money
- A statement that the person giving you money doesn’t expect repayment or anything else in exchange
- Your signature and the signature of the person giving the gift, with the date
6. Photo ID
You’ll likely need to provide a photo ID, such as a driver’s license. This is simply to prove you are who you’re claiming to be.
7. Renting history
For buyers who don’t already own a home, some lenders will request proof that you can pay on time. They may ask for a year’s worth of canceled rent checks (check that your landlord has cashed).
They might also ask your landlord to provide documentation showing that you paid your rent on time. Your renting history is especially important if you don’t have an extensive credit history.
Check out our rent vs. buy calculator to compare your numbers.
Next steps: Can you afford to buy a house?
Your lender’s goal is to assess you as a borrower and ensure you can make your payments on time.
If you’re thinking about a home purchase in the near future, these are some good questions to ask yourself to prepare for the home-buying process.
- How much down payment can you afford? A higher down payment is often a good sign for the lender about your finances.
- What is your debt-to-income ratio? You’ll likely need to keep this number below 43%.
- What monthly mortgage payment can you comfortably afford in your budget?
- Are you prepared for closing costs, such as an appraisal or prepaid property taxes?
Estimate your closing costs
Use our closing costs calculator to get a better idea of how much your closing costs could be when buying a home.
FAQs about mortgage documents
Applying for a mortgage usually involves giving the lender your tax returns, bank statements and documents that show your income, such as W-2s and pay stubs. You’ll also need documents proving your identity. Lenders will typically ask you to show them where you’re getting the money for your down payment and to get a signed gift letter if you’re using money from family or friends.
Mortgage documents include a promissory note, which says that you promise to pay your loan back, and the mortgage or security instrument, which says that the lender can foreclose on your home if you don’t make your payments. There’s also an initial escrow disclosure, which shows how much of your payment will go to taxes and insurance. Refinance loans also include a right to cancel form, which says that you have three business days to cancel the loan if you choose.
To qualify for a mortgage, you need sufficient income, a credit history and a debt-to-income ratio that meets lender requirements. There may be other qualification requirements depending on the lender and whether the mortgage is issued through a government program.
Your “front-end” debt-to-income ratio, which shows how much of your pretax income would go to your mortgage payment and other housing costs, should be generally no higher than 28%. Your “back-end” debt-to-income ratio, which shows how much of your pretax income would be needed for your mortgage payment plus all your other debt payments, typically shouldn’t be more than 43%.
The minimum credit score you need to get a mortgage depends on the type of mortgage and your lender’s requirements. You usually need a credit score of at least 620 for a conventional loan, and your credit scores must be at least 500 for an FHA loan. USDA loans and VA loans don’t have minimum credit scores, but qualified lenders may have their own eligibility guidelines.