What Do I Need to Get Pre-Approved For a Mortgage?

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Financing

What Do I Need to Get Pre-Approved For a Mortgage?

Do you know the documents needed to get approved for a mortgage? Getting preapproved for a mortgage is a significant step in the home buying process. While pre-qualifying can seem appealing because it requires so much less work, pre-approval is way more likely to help you make a successful offer on a home.

 

In other words, there is a difference between pre-qualification and pre-approval.

 

Pre-approval shows that you are likely to get a mortgage—while pre-qualification only indicates that there is a possibility that you could get a mortgage. Especially in competitive markets, pre-approval is a must-have before you start making offers.

 

If you are feeling a little daunted by the amount of paperwork you have to gather and complete to get pre-approval, you are not alone. Most home loans require extensive paperwork. It is going to take you some time and effort to get everything ready and to complete the application process.

 

One serious bonus to going through the pre-approval process, though, is that you will be well-prepared for the actual mortgage application process. Most of what you do in pre-approval will apply to the official application.

After you have picked a lender, this is precisely what they will be looking for to complete the application and pre-approval.

 

Here is a list of documents you will need for most of the popular mortgage programs for buyers.

checklist

 

Documents for Mortgage Pre-Approval

What You Need For a Conventional Loan

A conventional loan is a standard loan that does not involve a special program like the FHA or USDA. The conventional mortgage is one of the most popular loan products in the world.  If you don’t qualify for these special loan programs and you are an employee getting W-2s each year, you may apply for a conventional loan.

 

One of the few downsides of most conventional loans is you will pay private mortgage insurance if you put less than twenty percent down.

 

The mortgage documents you will need for conventional pre-approval include:

 

Identification (one of which you need to present in person)

A valid Driver’s license

A Passport

An Official state or federal ID

Income

30 days of pay stubs

Your previous two federal tax returns

Your last two W-2s

Proof of additional income—such as alimony or social security

Finance Accounts

Bank statements for the last two statement periods

Investment and retirement account statements

Property you own

Statement showing the settlement of your prior home sale if you have one

Additional documents

Gift letter from any family member helping with a down payment

Landlord contact information for the last two years

Letter of explanation concerning issues like collections and any other problems on your credit report

Divorce-related documents if applicable

What You Need For an FHA Loan

What Documents Are Needed For FHA Mortgage ApprovalSaveFHA loans are one of the most popular types of loan products out there. One of the most significant advantages of an FHA loan is the low 3.5 percent down payment.

 

Not every property qualifies for an FHA loan, especially when you are buying a condominium. It is essential to check if the complex you are buying at has been FHA approved. As mentioned in the reference, there are also condition requirements for a house to be eligible.

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Mortgage documents required for a Federal Housing Administration loan include:

 

Identification (one of which you need to present in person)

A valid driver’s license

A passport

An official state or federal ID

Income

30 days of pay stubs

Your previous two federal tax returns

Your last two W-2s or previous two 1099s

Proof of additional income—such as alimony or social security

Finance Accounts

Bank statements for the last two statement periods

Investment and retirement account statements

Property you own

Closing disclosure for purchase, or HUD-1 if the sale occurred before October 3, 2015

Additional documents

Gift letter from any family helping with a loan down payment

Landlord contact information for the last two years

Letter of explanation concerning issues like collections and other problems on your credit report

Divorce-related documents if applicable

What’s Needed For an Investment Property Purchase

If you are buying a property that you intend to rent such as a multi-family, the records you need for pre-approval will include:

 

Identification (one of which you need to present in person)

A valid driver’s license

A passport

An official state or federal ID

Income

30 days of pay stubs

Your previous two federal tax returns

Your last two W-2s or previous two 1099s

Proof of additional income—such as alimony or social security

Finance Accounts

Bank statements for the last two statement periods

Investment and retirement account statements

Property you own

Settlement statement for recent home sales

Recent statements for mortgages you have on other properties

Proof of insurance for all your properties

Current leases for all your rental properties

Additional documents

Gift letter from any family helping with payment

Landlord contact information for the last two years

Letter of explanation concerning issues like collections and other problems on your credit report

Divorce-related documents if applicable

Self-Employed or Business-Owner Mortgage

 What's Needed to Get a Mortgage When You're Self Employed Save

If you are self-employed or own your own business, you will need the following mortgage documents for pre-approval:

 

Identification (one of which you need to present in person)

A valid driver’s license

A Passport

An official state or federal ID

Income

30 days of pay stubs

Your previous two years of federal tax returns

Your last two W-2s or previous two 1099s

Proof of additional income—such as alimony or social security

Finance Accounts

Bank statements for the last two statement periods

Investment and retirement account statements

Last two years of tax returns for Corporate, S-Corp, LLCs, etc.

Last two years of 1099s

Property you own

Settlement statement from your previous home sale

Additional documents

Gift letter from any family helping with a down payment

Landlord contact information for the last two years

Letter of explanation concerning issues like collections and other problems on your credit report

Divorce-related documents if applicable

Current business license

Balance sheet if applicable

Profit and loss statements for the last two months

What’s needed for a VA LOAN?

A veteran’s loan is a fantastic mortgage product that is for those who are serving or have served in the military. One of the most significant benefits of a VA mortgage is the fact you don’t need a down payment. It is one of the few no down payment loan products still available.

 

You should also be aware that there are minimum property standards for a VA loan as well.

 

The Veteran’s Administration will ask for the following mortgage documents for pre-approval:

 

Identification (one of which you need to present in person)

A valid driver’s license

A passport

An official state or federal ID

Income

30 days of pay stubs

Your previous two federal tax returns

Your last two W-2s or previous two 1099s

Proof of additional income—such as alimony or social security

Finance Accounts

Bank statements for the last two statement periods

Investment and retirement account statements

Property you own

Settlement statement from your previous home sale

Additional documents

Certificate of eligibility from the Veteran’s Administration, which may require some or all of these documents:

Form DD-214, certificate of release or discharge

Statement of service from the adjutant, personnel office, commander, or higher headquarters if still on active duty

Form 26-1817 or form 21-534 for surviving spouses, plus form 1300, report of casualty, or death certificate

Landlord contact information for the last two years

Letter of explanation concerning issues like collections and other problems on your credit report

Divorce-related documents if applicable

 

What Does The Lender Need For a USDA Loan?

What's Needed For a USDA Loan Approval? A USDA loan is the other no down payment loan product available to buyers. The USDA loan, however, can only be written in those areas that are considered rural. The definition of rural is generally under a population of thirty-five thousand people.

 

The U.S. Department of Agriculture will need the following documents for pre-approval:

Identification (one of which you need to present in person)

A valid Driver’s license

A passport

An official state or federal ID

Income

30 days of pay stubs

Your previous two federal tax returns

Your last two W-2s or previous two 1099s

Proof of additional income—such as alimony or social security

Finance Accounts

Bank statements for the last two statement periods

Investment and retirement account statements

Property you own

Settlement statement from your previous home sale

Additional documents

Gift letter from any family helping with payment

Landlord contact information for the last two years

Letter of explanation concerning issues like collections and other problems on your credit report

Divorce-related documents if applicable

Form 410-4: Uniform Residential Loan Application, filled out by (s)

Form 3550-4: Employment & Asset Certification, a separate form filled out and signed by each applicant

Form 3550-1: Authorization to Release Information, a separate form filled out and signed by each applicant and each adult household member

Form 4506-T: Request for Transcript of Tax Return, a separate form filled out by each applicant

Life insurance policy

Child care expenses documentation for any dependent 12 or younger

Current school transcript for household members who are full-time students and 18 years or older

Annual medical expenses for applicants 62 years of age or older, or with a disability (to be considered for an in household income)

A written explanation of two years of employment history, including an explanation of gaps if there are any

A Job-Based Incentive Loan

There are some programs intended to help workers in particular professions own homes, such as teachers, police, and firefighters. One of the more well-known programs is called Good Neighbor Next Door. Each has its own criteria, but most will require the following:

 

Identification (one of which you need to present in person)

A valid driver’s license

A Passport

An official state or federal ID

Income

30 days of pay stubs

Your previous two federal tax returns

Your last two W-2s or previous two 1099s

Proof of additional income—such as alimony or social security

Accounts

Bank statements for the last two statement periods

Investment and retirement account statements

Property

Settlement statement from your previous home sale

Additional documents

Gift letter from any family helping with payment

Landlord contact information for the last two years

Letter of explanation concerning issues like collections and other problems on your credit report

Divorce-related documents if applicable

 

 

 

 

Final Thoughts

Hopefully, all the documentation needed to get a pre-approval from a lender has been helpful. Getting a mortgage is a big step in the home buying process. Getting yourself organized well in advance is one of the things I recommend to do before buying a home. Those who are well prepared have less stress and an easier time buying a house.

 

Once you have your pre-approval, you’ll want to make sure you don’t do anything that will get your mortgage approval taken away like buying a new car. Many buyers do not realize how much purchasing a car while buying a home can impact their finances.

 

After being in the real estate business for thirty plus years, I have seen a few people make this mortgage mistake. Don’t be one of them!