Pop quiz: Do you know the top documents needed for a home loan?
Hundreds of thousands of people apply for a home loan every year, and about 88% of those applications are approved.
While the odds are in your favor, you still need certain documents and navigate the process to get approved. Read on to learn what the documents you need to get your home loan approved.
5 Documents Needed for a Home Loan
Getting a home loan is stressful. Some data indicate that unless you present a case that you are creditworthy, you’re 32% more likely to be denied a loan.
The only way to present your case to the banks is to have the proper documentation to buy the perfect home. These are the 5 documents needed for a home loan.
1. The Loan Application
You need to provide a completed loan application. This will include basic information like your name, date of birth, and social security number.
You’ll also provide your employment information, whether or not you have filed for bankruptcy, and past addresses. This information will appear on your credit report too.
2. Pay Stubs or W-2 Forms
The biggest concern that banks have is your ability to pay back your home loan. They want to see your income over the last couple of years. They want to see steady and consistent income.
That can be hard to prove if you’re self-employed or if you’ve been paid in cash. You can use a fake paystub maker to provide the information that bankers will want to see.
3. Tax Returns
If you’re providing pay stubs or profit and loss statements, it may be tempting to fudge the numbers a little bit to put yourself in a better position.
Banks are only going to verify your information by asking for tax returns for the past two years. If your tax returns don’t match your pay stubs, you will get denied.
4. Credit Report
You don’t need to pull the credit report for the home loan, but you do need to give banks permission to pull your report.
You should know what your credit report looks like months in advance of looking for a home to give yourself time to repair it.
5. Bank Statements
Banks want to ensure that your W-2s, tax returns, and pay stubs are consistent.
They also want to see how much money you have left over at the end of each month. They want to see if you’re living paycheck to paycheck or if you’re setting aside money for savings.
If you’re living paycheck to paycheck, you might have an issue with getting your loan approved.
The Home Loan Process Made Easy
The home loan process is complicated. It seems like banks want everything under the sun, including your firstborn to prove that you’re creditworthy.
When you think about it, you only need to prove your income over a two-year period. Start by putting together the 5 documents needed for a home loan.
Ready to get started? Take a look at these mistakes that first-time home buyers should avoid.