What documents do you need to prequalify for a mortgage

The document requirements for mortgage preapproval vary by lender and your individual circumstances, but typically, you'll need to provide documents which show your income, your assets and any regular commitments against your income. These will include, but may not be limited to:

Thirty days of pay stubs
Two years of federal tax returns
Sixty days or a quarterly statement of all asset accounts including your checking, savings and any investment accounts
Two years of W2s

"If you have any unusual income or circumstances, you'll need to provide other documents," says Peter Boyle, a senior loan originator at Summit Mortgage Corporation in Plymouth, Minnesota. "For instance, if you're divorced, I need to see a decree. If you filed bankruptcy, I need a full copy of the discharge documents. If you have rental income, I need a copy of the lease."

A mortgage preapproval can be "pretty painless," says Turano, as long as you are prepared with appropriate documents.

In addition to paperwork, your preapproval session with your lender should include a discussion about your down payment and loan options.

You must document your down payment!

"It's important to have a paper trail of where your down payment and closing cost funds are coming from," says Aiman Abozeid, branch manager for Inlanta Mortgage in Madison, Wisconsin. "You can't use any undocumented 'mattress money' for your down payment or money you've deposited from a credit card withdrawal or gambling winnings. If you have any odd deposits you'll need to document them with deposit slips and an explanation to make sure they aren't unauthorized gifts."

"Your finances are going to be under a microscope," says Boyle. "We need to be able to track everything."

For example, if you are getting married and are relying on the cash gifts you will receive for a down payment, lenders want that money deposited into your bank account as soon as possible and even want to see a copy of your wedding invitation to ensure that the date of the deposit aligns with the date of the wedding.

Simply put, any sudden change in your finances – for better or worse, but especially better – will need to be explained, and if you cannot document it, it likely won’t be counted. If family members have contributed to your pool of cash, be prepared to have them sign “gift letters,” which certify that these are not loans and have no required or obligatory repayment. These letters will often need to be notarized, and getting that done and returned to the lender may take some time, slowing down your loan process.

Related: A full list of the documents you'll need to get a mortgage today

(Image: pagadesign/iStock)

Print page

Even though many lenders are still quoting quick 10 minute pre-qualifications over the phone or online, a true mortgage approval that holds any weight is one that has been issued by an underwriter who has had an opportunity to review all of the necessary documents.

With a constant stream of new lending guidelines, volatile mortgage rates and tightening regulation from Washington, very few real estate agents will show new homes to a First-Time Home Buyer without at least a pre-qualification letter.

A Pre-Approval Letter will help you in three ways:

It lets you know how much mortgage you can qualify for
It gives you an estimate of what your total housing payment would be
Submitting a strong “Pre-Approval” letter with a purchase offer will give the seller more confidence about your ability to complete your end of the agreement

It’s obviously a good idea to get your paperwork prepared ahead of time so that the pre-approval process is as thorough as possible.

In order to get a pre-approval letter, you’ll start by filling out a loan application and submitting a few documents for the loan officer and / or underwriter to review.

Income / Assets for Wage Earner:

Last 2 year W2s and Tax Returns
2 most recent Pay Stubs
2 most recent Bank Statements, 401(K), Liquid Assets, Investment Accounts

Income / Assets for Self-Employed:

Last 2 year Tax Returns – Business and Personal
Last Quarter P&L Statement

Letter of Explanation For:

Employment Gap or New Line of Work
Late Payments / Judgments / Bankruptcy on Credit Report

Other:

Bankruptcy Discharge
Child Support Documentation
Lease Agreements (If own other Rental Properties)
Mortgage Payment Coupons (If own other Real Estate)

…..

Most borrowers also want an opportunity to learn more about the loan officer before digging up all of these personal documents. Spend 15 minutes on the phone asking the loan officer to explain how mortgage rates work, quizzing them on some basic industry vocab or just to see if they know what to prepare your agent for ahead of time. The Q&A session can be more than just a lender qualifying you, as long as you’re prepared to ask the right questions.

Either way, you’ll definitely want to have the above list of approval documents ready once you’ve decided on the right loan officer that you trust will meet your expectations.

_________________________________