When you apply for a mortgage to purchase a home, lenders will require you to provide extensive documentation to verify your employment, income, assets, money you owe, and other personal information including your credit report.
Compiling all those documents may seem daunting to many home mortgage seekers, but it does not have to be that way. With some preparation and knowing what to expect, you will be ready to take on this task with ease.
To ensure that you have the best chances of getting your mortgage loan approved on your terms, we have prepared a checklist of the documents a lender may request when assessing your mortgage application.
Download our easy to use mortgage checklist and be on your way to move into your dream home.
When you apply for a mortgage loan the lender will require you to submit a set of documents before you can be approved for a mortgage loan.
I have grouped those documents in three main areas, your Income, your net worth (savings & debts), and the property.
This mortgage document checklist will help you get prepared with the correct documents so that your mortgage application goes smoothly.
Salaried or Hourly Employees
In short, lenders want verifiable evidence that proves that what you disclosed on the mortgage application is accurate.
The main areas evaluated are:
You will need to provide at least two pieces of government photo ID, places you have lived in for the last three years, employment history, and approval to access your credit report.
When it comes to proving your address and ID, the information you provide must be current.
The documents needed to prove your income will depend on your specific situation, and which lender you decide to apply with; however, the most common documents required are:
Are you permanently employed?
The lender wants to see at least two years of consistent full-time employment history.
Try not to change jobs in the months leading to your mortgage application; the reason is if you are within your probation period, the lender might view that as an issue. But if you must change jobs, make sure you are not changing careers and that your new job is consistent with your employment history.
Are you on a fixed-term contract?
If you are on a fixed contract, the lender will want to take a careful look at your employability and your credit history to form an opinion of your character, and the lender might request further information such as income tax returns for the last two years.
Are you self-employed?
Self-employed individuals will need to provide income tax returns for the last two years, and notice of assessments, as well as financial statements, if applicable.
Do you have other income sources?
If you have declared additional income on your mortgage application, you will need to provide evidence of this such as the following.
Because of money laundering policy requirements, the lender will need to know where the money for your deposit is coming from; so you will need to provide copies of bank statements or saving accounts that show you have the money, and the source of it.
The source of your down payment may come from the following:
To get a better picture of your financial situations, lenders will want to know everything you own, as well as everything you owe. This will help the lender understand how much of your current income goes against paying your existing debts, and how much money you will have available to pay your future mortgage.
If you are applying for mortgage pre-approval you don’t need the property information since you haven’t bought the house.
For a final mortgage approval, you will need to supply information about the property.
The lender is like your partner on this transaction; essentially, they need to know what they are buying. So, relating to the property, the documents you will need to submit to the lender are:
Applying for a mortgage can become a long and complicated process if you are not prepared.
Typically you are not asked to provide any documentation until after you have submitted your application; however, having all the supporting documents ready ahead of time will be your secret sauce to a much better experience.
Also, reviewing these documents ahead of time gives you the time to address issues you may encounter such as errors on your credit report, or missing documentation. This helps you avoid unnecessary delays.
Now that you know what to expect, we recommend to have the documents ready before you submit your mortgage application; this will result in a lot less stressful application and approval process and you will be on your way to achieve a successful home-ownership.