12 Documents You Need to Apply for a Mortgage: Before You Apply

Knowing the documents you need to apply for a mortgage is the first step toward making your dream a reality. Are you getting ready to buy your first home? Well, most of the documents you need to apply for a mortgage are things you already have. What if this is not the case?  You can easily get them from your workplace or online accounts.

In 2024, mortgage lenders approved 81% of all mortgage applications, with an approval rate of 85.89% for purchase mortgages. This is according to Homebuyer analysis of Home Mortgage Disclosure Act (HMDA) data. What happened to other applications that were rejected? These numbers show why being prepared matters so much.

Knowing exactly which documents you need to apply for a mortgage before time can save you a lot of stress. When you have the documents organized and ready, your loan officer can process your application fast.

Why Do Lenders Need All These Documents to Apply for a Mortgage?

Why do mortgage lenders ask for so much information? A mortgage is hundreds of thousands of dollars. So banks need to be sure you can pay them back. That’s a simple and short response. They’re protecting their money and your ability to afford your new home.

Also, do you know that federal laws require lenders to verify everything you tell them about your income, debts, and savings? This protects you from borrowing more than you can afford. So, every document serves a specific purpose in the complete picture of your financial health.

The 12 Essential Documents You Need to Apply for  a Mortgage

When you are applying for a mortgage, having the right documents ready can go a long way. Why? Because lenders need to verify your financial health. And here are 12 essential documents that every borrower will need to gather before submitting their application.

1. Photo Identification Issued by the Government

Like we already know, you’ll need to prove you are who you say you are. Why? Because lenders need to make sure someone isn’t pretending to be you to get a loan. Your driver’s license or passport works perfectly for this. 

What you need to do is make a clear copy of your current, non-expired ID. Both the front and back should be visible and easy to read. You will need a clear and authentic photo ID as one of the documents you need to apply for a mortgage.

2. Social Security Card

Do you know that your Social Security number helps lenders pull your credit report and verify your identity with government records? And this is one of the documents you need to apply for a mortgage.

You can provide either your actual Social Security card or a W-2 form that shows your full Social Security number. It is one of the most important documents you need to apply for a mortgage because it unlocks access to your credit history.

3. Pay Stubs from the Last 30 to 60 Days

Lenders also want to see proof that you currently have a job with a regular income. Your pay stubs show exactly how much money you make each paycheck. Most of them ask for your two most recent pay stubs. 

The right question here is, “Do you have steady money coming in to make your monthly mortgage payments?”

Your pay stubs also show deductions like taxes and insurance. They help lenders calculate how much money you actually take home. For example, if you earn $4,000 per month but $1,200 goes to taxes, the lender knows you would have $2,800 for expenses.

Read Also: How to Reduce Your Mortgage Monthly Payment: 5 Easy Tips

4. Two Most Recent Years of W-2 Forms

We already know that your W-2 forms provide a complete picture of your yearly income. While pay stubs show recent earnings, W-2s give proof of income over time. 

Employees receive these tax forms from their employers every January for the previous year. So, if you’re applying for a mortgage this year, you’ll need your W-2s from the previous year. Your recent W-2 forms are also parts of the documents you need to apply for a mortgage.

What do lenders use them for? To confirm that your income is consistent and reliable. Did you change jobs? Don’t worry. Provide W-2s from all employers you worked for during this period.

5. Federal Tax Returns Covering The Last Two Years

Lenders require your complete federal tax returns for the past two years. The documents show your total income from all sources, not just your main job. Tax returns include income from side jobs, investments, rental properties, and other sources.

Tax returns are like your financial report card for the year. They show the lender every dollar you made and where it came from. One can download these directly from the IRS website or get them from their tax preparer.

6. Bank Statements Covering The Last 2 to 3 Months

Mortgage lenders need to see your recent bank statements from all your accounts. The documents prove you have enough cash saved for your down payment and closing costs. 

Lenders want to make sure this money has been in your account for a while and isn’t borrowed from another source. Thus, the bank statement plays a part in the documents you need to apply for a mortgage.

Do you know that your statements also show your spending habits? Lenders look to ensure you’re not spending more than you earn each month. So, do you manage money well? Or do you have some left over after paying your bills?

Read Also: How to Reduce Home Insurance Premiums: Best 7 Ways

7. Confirmation of Employment

Many lenders also ask for a written letter from your employer confirming that you work there. The letter is called an employment verification letter. It states one’s job title, how long one has worked there, and one’s salary. The human resources department can provide this within a few days.

Some lenders may go so far as to call your employer directly to verify the information. This is normal. It’s another way they confirm that the documents you need to apply for a mortgage are accurate.

8. Property Purchase Agreement

When you find a house you want to buy, what’s next? You’ll sign a purchase agreement with the seller. The document states:

• the price you’ve agreed to pay 
• important dates, like when you need to close on the home 

Why does your lender need a copy? Because they need to know which property they’re helping you buy and how much it costs. This is a part of the documents that will help your lender to process your need to apply for a mortgage.

9. Homeowners Coverage Quote

Lenders invested in this property, too. So they require proof that you’ll have insurance on your new home. What do you do? Get a quote from an insurance company showing how much it will cost to insure your home. The insurance protects you and the lender if any risk, like fire or storm, occurs.

How do you get this quote? It’s very easy. Call insurance companies or use websites to compare prices. Many people bundle their home and car insurance with the same company to save money. So you need to place a call to have the right information.

Read Also: Zero Down Payment: How to Buy a House with No Money Down

10. Letter Documenting Gift Funds (If Applicable)

Are your parents or other family members giving you money to help with the down payment? If so, you’ll need a gift letter. This document will state that the money is not a loan you have to pay back. Why do lenders need this? Because they want to know about all your debts. This is why it stands as one of the documents you need to apply for a mortgage.

The gift letter should include: 

• who is giving you the money, 
• how much they’re giving, and 
• a statement that they don’t expect to be repaid. 

This is one of the documents you need to apply for a mortgage, only if you’re receiving financial help from family or friends.

11. Letter of Explanation (If Needed)

Why do lenders need this letter? When lenders see something unusual in your financial history, and want an explanation. These instances are, for example: 

• you changed jobs recently, 
• had a gap in employment, or 
• have a large deposit in your bank account. 

In these cases, you’ll write a simple letter explaining the situation in clear and honest terms. Lenders appreciate transparency and just want to understand your circumstances.

12. Documentation of Other Sources of Income

If you earn money from sources other than your main job, you’ll need to prove it. This might include: 

• rental income from properties you own, 
• alimony or child support payments you receive, 
• Social Security benefits, 
• pension income, or 
• investment dividends. 

Each type of income requires different documents. 

• For rental income, you’ll need lease agreements and possibly tax returns showing this income. 
• For alimony or child support, you’ll need court documents and proof that you’ve been receiving these payments regularly. 
• Investment income requires account statements showing dividends or interest earned.

Read Also: How to Know When You Are Ready to Buy a House

How to Organize Your Documents

Now, you know the documents you need to apply for a mortgage. How do you stay organized? 

• Create a folder on your computer and label it “Mortgage Documents” 
• save digital copies of everything
• keep physical copies in a binder, organized by category. 

This way, when your lender asks for something, you can find it very fast. Also, gather these documents at least a month before you plan to apply. 

To stand out in your application, check that all documents are current and readable. Blurry copies or outdated statements won’t work. Lenders need clear and legible documents they can easily review and verify.

Common Mistakes to Avoid

Many applicants make simple mistakes with the documents they need to apply for a mortgage. These mistakes can easily be avoided, and some of them are:

• Not signing and dating every document. 
• Not making sure that all information matches across documents. 
• trying to hide debts or other financial problems. 
• Not responding quickly when your lender requests additional information. 

Unsigned papers can’t be processed. And if your pay stub shows a different address than your ID, you might need to explain the discrepancy. Lenders will still check your credit, and honesty is the best policy. The faster you provide what they need, the faster the process becomes.

Conclusion

Breaking down the documents you need to apply for a mortgage into 12 categories makes the process simple. Every document serves an important purpose in proving you’re ready to own a home. 

Lenders aren’t trying to make your life difficult.  Instead, they’re ensuring you can afford your dream home while protecting their investment. And this is why the need for these documents apply with the mortgage process.

Start collecting these documents early and keep them organized. Also, keep the lines of communication open with your lender throughout this process. Be patient and go through this paperwork stage, and soon you will be holding the keys to your very own home.

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