by Aidan Kang, CFA
Senior Writer
UPDATED: October 20, 2021

Mortgages are like tests,  if you take them without preparation, you’ll probably end up flunking. 

When you apply for a mortgage, the lender will require documentation to verify your application. The forms you will need for a mortgage depending on your particular situation. For instance, a self-employed person will need to submit different forms than a person working for a firm.

Based on your financial situation, there are seven mortgage documents that you may require to submit when applying for a home loan. 

We have mentioned them all, so make sure to read this article till the end.

1. Tax Returns

The mortgage lender would like to know the complete picture of your financial standing. They'll likely require you to sign a Form 4506-T. It allows the lender to request a tax return copy from the IRS.

Most lenders require at least one or two years' tax returns. These ensure that your annual earnings are consistent with the payments you reported on pay stubs. Also, there shouldn't be massive yearly fluctuations

2. Pay Stubs, W-2s, or Other Income Evidence

The lender may request the pay stubs that you have earned in the previous month. Tax returns give them an idea of your overall financial condition, and pay stubs can help to assess your current income. 

If you're self-employed or have other income sources, you may need to prove your lender's legitimacy via 10-99-forms, direct deposit, or other methods.

3. Asset and Bank Statements

While assessing your personal risk, the lenders might look at your bank accounts and other assets. It could include your investments and insurance policies, like life insurance.

The lenders typically require these documents to ensure that you have a few months' worth of mortgage reserves in your account in the event of an emergency. They will also verify that your down payment was in your bank account for several months and did not arrive overnight.

4. Credit History

To evaluate you as a loan applicant, lenders will look up your credit score with your written or verbal consent. You may have to explain any inconsistencies in your credit score. 

It would be best if you were prepared to write a statement explaining negative items on your credit report. It will help the lender determine the risk level. The lender may view situations that are unavoidable for a short time differently from the usual delinquency.

5. Gift Letters

Your family and friends may assist you in buying a home by offering you money. If this is the case, you'll need to officially confirm that the money is a genuine gift and not a loan. 

The documents should mention the relationship between the one who is gifting and you, along with the actual amount of the gift.

6. Photo ID

You will likely need to present a photo ID, like a driver's license. It is just to prove that you're the person you claim to be.

7. History of Renting

If you are a buyer who doesn't own a home at present, many lenders will require evidence that you can pay on time. They may request an entire year's worth of canceled rental cheques that your landlord has cashed. 

They may also ask your landlord to submit proof that you have made your rent payments in time. Your rental history is especially crucial if you don't have a lengthy credit background.

Final Word

The required documents to submit the mortgage request is generally the same for all banks and other lending institutions. Some specific requirements could differ from lender to lender. 

The documents needed for a home loan may also vary depending on your loan plan, the nature of the loan, your credit profile, etc. For flexible loans, you can also consider using a mortgage loans credit union

We are sure the above tips will help!