Documents Needed For Mortgage Preapproval

Anchiy/GettyImages; Illustration by Hunter Newton/Bankrate

Key takeaways

To preapprove you for a mortgage, a lender will require documentation proving your identity and confirming your credit and financial situation.
Bank statements, tax returns and pay stubs are some of the documents typically required for preapproval.
This documentation helps the lender decide how big of a loan to offer you.

Before you buy or refinance a home, you’ll want to apply for preapproval, which is a statement of how much a lender might be willing to loan you. To figure that out, the lender will ask for a series of documents describing your financial situation. Getting these documents in order before you apply can help the process go more smoothly.

Mortgage preapproval checklist

	Pay stubs from at least the past 30 days
	Tax returns, including W-2s, from the past two years
	Bank statements — including checking, savings and money market accounts — from the past two months to three months
	Contact information of employers in the past two years. Some employers have an employment verification phone number lenders can call.
	Business records, if self-employed
	Evidence of other income, such as bonuses, child support or alimony, disability benefits, pension payments, or Social Security
	Account statements for 401(k)s, IRAs, CDs, mutual funds or other investment or retirement vehicles from the past two to three months
	Down payment gift letter, if applicable
	Information on other real estate, if you have multiple properties
	Loan statements — auto loans, credit cards, personal loans, student loans and others— from the past 60 days
	Credit reports and scores, retrieved by the lender with your authorization
	Rental history, including contact information for landlords and proof of rent payments, such as canceled checks or paid receipts
	Recent residence addresses and tenure at each
	A driver’s license, passport or other government-issued ID to verify your identity
	Social Security card

Documents for mortgage preapproval

Employment and income

Before a lender grants you a mortgage, it must confirm that you can repay the loan. To prove your creditworthiness, you’ll need to provide evidence of your income and confirmation that you’ve been employed with the same company — or at least in the same industry — for two years. However, in some cases, it is possible to qualify with a shorter employment history.

You’ll likely need to provide:

Most recent 30 days of pay stubs, or 60 days if you’re paid monthly
Tax returns, including W-2s, for the past two years
2 to 3 months’ worth of bank account statements
Contact information for any employers you’ve had within the past two years. Some companies have an employment verification phone number for lenders
Business records, if you’re self-employed
Proof of any other types of income, including bonuses, child support or alimony, disability benefits, pension payments or Social Security

“The lenders need to know that you have stable income that can service the mortgage payments on a regular basis,” says Alexei Morgado, founder of Lexawise, a real estate exam prep company.

Assets

Along with documenting your income during preapproval, lenders also need to document your assets. This helps a lender understand the other resources you could use to pay your mortgage if you were to lose your income. You may need to provide:

2 to 3 months of retirement account statements, including 401(k)s and IRAs
2 to 3 months of investment account statements
Information about other real estate holdings, if you have them, including vacation homes or rental properties
Down payment gift letters, if applicable

Debts

The amount of money you have coming in is just one piece of your financial puzzle; lenders also need to know how much of your monthly income you’re already spending on other debts. This helps them calculate your debt-to-income (DTI) ratio and decide how much you can spend on a mortgage, as well as your loan’s interest rate. Lenders will likely want the last 60 days of statements relating to your:

Auto loans
Credit cards
Student loans
Personal loans

“As part of the qualification, they will compare the monthly debt to the monthly taxable gross income to see that it meets [acceptable] debt-to-income ratios,” says Shmuel Shayowitz, president of Approved Funding. Ideally, for a conventional loan, most lenders want no more than 36 percent of your income to go toward debt payments and your potential mortgage.

Credit history

Before a lender approves your mortgage, it will want evidence of how you’ve handled debt in the past, including whether you’ve repaid your balances and made consistent, on-time payments. Your credit profile also lets lenders see whether you’ve ever filed for bankruptcy or have any outstanding delinquencies.

As part of this review, a lender will retrieve your credit report, conducting what’s known as a hard credit check.

Identification

Confirming your identity is another element of the preapproval process. You’ll need to provide government-issued identity documents, such as a:

Drivers license
Social Security card
Passport
State or federal ID card
Tribal ID card

Additional documents needed for special circumstances

“Special situations necessitate extra paperwork,” Morgado says. “All the extra paperwork helps fill out certain types of risk that the lender will need to calculate prior to providing the applicant with preapproval.”

You might need to give your lender additional documentation if you:

Already own a home. Your lender will want to know how much the home is worth, the monthly expenses associated with it and its occupancy status —that is, if you’re able to get any income from it. If you have a mortgage on the home, your lender will want details about that, as well.
Are self-employed: Being self-employed doesn’t prevent you from getting a mortgage, but you’ll have to provide more documentation than a full-time employee. Lenders may require that you submit year-to-date profit and loss statements, a list of accounts receivable, 1099s or other paperwork.
Are applying for a non-conforming or non-QM loan: These loans don’t adhere to certain federal standards for mortgages, including rules about loan size or required income documentation. You may need to meet more stringent qualifying standards — for example, if you’re seeking a jumbo loan, one type of non-conforming loan — or you may need to provide different evidence of income or credit management. This might include proof of rental property income or rental payments to a landlord.
Will use veteran benefits: Applicants seeking a VA loan must include a Certificate of Eligibility (COE) issued by the U.S. Department of Veterans Affairs. A COE confirms eligibility for a VA loan.

FAQ

Preapproval isn’t required to borrow a mortgage, but having one does show real estate agents and sellers that you’re serious about buying. It can also expedite the actual mortgage application process, as you’ll need many of the same documents for preapproval and underwriting.
The length of time it takes to get preapproved varies by lender. Some lenders can take a week to 10 days. Others offer preapproval in as little as one day.
Yes, preapproval letters do expire. Often, they’re valid for 60 to 90 days. If you haven’t found a home before your preapproval expires, and your finances haven’t changed much, it’s typically easy to renew the letter.
Because the mortgage preapproval process involves conducting a hard credit check, your credit score may take a hit. But typically, it will only drop by a few points, and the impact is only temporary. If you apply for preapproval with multiple lenders within 45 days, you’ll only get dinged once.
One of the best ways to improve your chances of preapproval is to raise your credit score. Paying down debt helps with this, but so does disputing inaccurate, unfavorable information on your credit report. Avoiding taking out other credit or closing credit accounts while you’re applying for a mortgage also helps.