What is proof of income? Document examples and where to find them.

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In a Nutshell

If you’re applying for a mortgage or rental agreement, you’ll likely need to provide proof of income. Some common documents to have on hand: paystubs, tax returns, W-2 and bank statements, among others.
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Proof of income is an important number to mortgage lenders, landlords and many other entities.

Your income can be a factor that determines everything from your health insurance plan to the amount you may qualify for if you take out a personal loan, auto loan or mortgage.

It’s essential to know what your income is and how this number affects different areas of your life. In this article, we’ll review what proof of income is and what documents you can use as proof of income (and where to find them).

What is proof of income?

Proof of income is a document or set of documents that someone, usually a lender or landlord, requests to verify your income and determine your qualifications for a mortgage, rental agreement or other loan or service.

A lender or landlord may ask for some form of a proof of income letter. This letter summarizes and verifies your income and employment. This letter may be written by you, an employer, an accountant or someone else depending on your situation.

It’s important to include your basic income information in this letter to give a clear picture of your earnings. This number may include your average workweek hours, yearly salary or hourly wage and how you foresee this income will be sustained in the future.

In addition to a proof of income letter, a lender or landlord may ask for supporting documents as proof. They may also ask for a range of documents in lieu of a letter.

Proof of income may come from income from a salaried or hourly job, or it may be from passive income that comes from interest, capital gains and stock investments. You’ll want to make sure you have a way to verify it to a lender if you want it to count toward your income.

Each lender will have its own requirements in terms of credit scores, down payments, income and debt-to-income ratios required to be approved for a mortgage or other loan.

For example, FHA loan requirements for down payments and credit scores are often less stringent than requirements for a conventional loan. Be sure to ask your potential mortgage lender what they require so you can determine if they’re a good fit for your financial situation.

What can be used as proof of income?

Depending on the lender, different documents are considered more authoritative than others. In general, you should expect to submit a paystub or two and a copy of last year’s federal tax return if you’re applying for a mortgage.

We’ve listed below what documents you may need to show proof of income. This gives you an idea of what documents you can use, where you can get these items and why some documents may work better than others. Most of these documents should include …

  • Your full name
  • Additional identifying information (like your Social Security number)
  • Income amount
  • Date
  • Employer name (when applicable)

13 proof of income documents for homebuyers

Here are 13 forms of proof of income home buyers may need to provide during the home loan approval process.

1. Paystubs

Paystub requests can vary by lender. Some lenders may require only your most recent paystub, while others may require multiple months. Provide your most recent paystubs as proof of income to give the most up-to-date representation of your income.

Where to get it: Request your paystub from your payroll department.  

2. Proof of income letter

This acts as a verification of income and confirms your employment status. It should include your personal information, work history and employer’s contact information.

Proof of income documents from your employer can give the most up-to-date picture of your income since they take into account any changes in your wages from the past year.

Where to get it: Request a proof of income letter from your employer or write your own and have it verified by relevant parties.

3. Last year’s tax return

Last year’s tax return is otherwise known as a Form 1040. This is a complete document that contains all of your sources of income in one place. Keep a copy of this form handy since it is useful for proving income and other things.

Lenders generally want to see one to two years’ worth of tax returns to show a consistent income.

Where to get it: If you don’t have a copy of your tax return, you can request it online through the IRS. You also should be able to download it from the website of the tax preparer you used.

4. Wage and tax statement

You may need to provide W-2s from employers to give an accurate snapshot of your income. Employers must issue W-2s for tax purposes if they paid you at least $600 in wages or other compensation for the year.  

Where to get it: Request W-2s from your employer. You may be able to download from an employee financial portal.  

5. Social Security proof of income letter

If you receive Social Security income, this letter will verify your earnings. You can print a benefit verification letter online through your “my Social Security account.” Read through the Social Security Administration’s guide to see how you or a family member can access your benefit verification letter.

Where to get it: Find your statement at your “my Social Security account.”

6. Annuity statement

An annuity is an agreement between you and an insurance company where you receive a fixed stream of money in exchange for previously paid deposits. Your annuity statement or a 1099-R tax form should verify any income you receive from your annuity. You can request an annuity statement from your insurance agent.

Where to get it: Request annuity statements from your insurance agent or through the company’s online portal.

7. Pension distribution statement

A pension distribution statement is issued as a 1099-R form. This form verifies any income you earn from pension distributions or several other types of income.

Where to get it: Your 1099-R form should be sent out annually during tax season if you’re taking a distribution. If you need an extra copy, request one from the company that manages your account.

8. Court-ordered agreements

You may earn some income from court-ordered agreements such as alimony or child support. While it’s a good idea to keep these legal documents in a safe place, if you’ve misplaced your copy, you can request a copy of these agreements from the court.

Where to get it: Request necessary documents from the court or your attorney.

9. 1099 statement for self-employed

A 1099 form is a type of earnings and tax statement for people who are self-employed. These forms help prove your wages and taxes as a self-employed individual.

Companies must issue a 1099-MISC for tax purposes if you provided at least $600 worth of services during the year.

Where to get it: Companies should provide this to you annually around tax time. If you need a copy, you can also request your tax return through the IRS.

10. Profit and loss statement or ledger documentation

If you own a business, you will probably fill out a profit and loss statement when filing taxes. This summary of your costs, expenses and revenues can demonstrate your income to a lender. You can find your tax return through the IRS.

Where to get it: Request your tax transcript through the IRS.

11. Bank statements

A bank statement can help show a stable flow of income if you have a history of steady deposits and spending. This can help demonstrate your ability to pay to a lender or landlord. It’s best to keep a separate account for business expenses so you don’t confuse any transactions with your personal expenses.

Mortgage lenders may assess your bank account to ensure you have enough funds to cover several months of loan payments.

Where to get it: Request your bank statements through your banking institution’s website or customer service.

12. Unemployment benefits

Unemployment benefits give temporary financial assistance to unemployed workers who meet certain requirements set by their state. If you receive unemployment during a year, your state should issue you a 1099-G during tax time.

But keep in mind that if you’re unemployed, it will be much more difficult to qualify for a mortgage or other type of loan.

Where to get it: Request unemployment benefit verification from your state unemployment office or use your 1099-G as proof.

13. Workers’ compensation letter

Workers’ compensation provides assistance to people injured in the workplace, including wage replacement and compensation for medical treatment.

These documents may be helpful if you need to prove income for a short period of time, but keep in mind that you’ll need a more stable stream of income when these streams eventually stop.

Where to get it: Request your workers’ compensation letter from the insurance company or court that handled your case.

Proof of income for renters

Potential landlords will likely ask for some form of proof of income to verify your ability to pay. At the very least, you should use documents that prove steady income for the duration of your lease.

For example, a combination of paystubs and bank statements may suffice if your landlord accepts these documents. Here are a few documents your landlord may ask you to produce as proof of income.

  • Paystubs — These documents can provide an up-to-date snapshot of your wages.
  • Proof of income letter A letter like this is useful since it can give your landlord additional insight into your employment background.
  • Last year’s tax return (1040) This comprehensive document can give a full picture of your income from the last year. It may make it easier for your landlord since all of your income streams are recorded in one document.

Your landlord may not accept documents for short-term streams of income since the temporary cash flow may leave you unable to pay later down the line. Double check with your potential landlord when you’re preparing your rental application to make sure you have the right documents and that you meet the income requirement.

Above all else, it’s important to keep copies of important documents so you can easily produce them when someone requests proof of income.

Next steps

Proof of income helps landlords or lenders verify your ability to pay. So, if you’re getting ready to rent or buy a house sometime soon, be ready to provide the proper documentation.

It’s also a good idea to create a financial plan so you can determine if you’re on track financially for a loan. Having a financial plan can help you figure out what your goals are and how you’re going to achieve them. Be sure to include renters’ or home insurance in your plan.