Proof of Income for a Home Loan
Producing a proof of income for a home loan is important if you want lenders to trust you and give you the money so that you can start renting a house or paying for one.
A home loan is a type of loan that is used to purchase a home or to refinance an existing mortgage. Home loans are typically fixed-rate mortgages, meaning the interest rate will stay the same for the life of the loan.
How Many pay stubs do you need for a Mortgage?
How long do you need to keep pay stubs for a mortgage?
2 years usually, and for a consistent period of time.
However, most lenders vary and they may consider your personal situation, your credit score and your employment history if they’re going to give you the loan.
What is a Mortgage or Home Loan?
A mortgage is a type of loan that is used to purchase a house.
The mortgage is secured by the house that is being purchased.
This means that if the borrower does not repay the mortgage, the lender can take possession of the house.
What Documents do I need for a Home Loan?
Mortgage lenders usually want to know the whole picture of your financial situation. This means you may be required to sign a Form 4506-T, this allows lenders to request a copy of your tax returns from the IRS.
Sometimes, lenders require a year or 2 for tax returns. This is to ensure that your annual income is consistent with how much your reported earnings are throughout the given tax year.
Pay Stubs, W-2’s and other Proof of Income Documents
Pay stubs are crucial because they show how much you earn for a given period. Your 1040s or 1099 forms may also be important because it shows your taxes withheld and that you are a responsible citizen for paying your government remittances.
If you don’t have a whole lot of credit history, you may be told to present your renting history instead. If you can pay the rent on time or where there are occasions where you failed to meet the payment schedule for an apartment. These are all critical questions and if you can present a pristine rental history, it gives you more credibility.
They can also look at your bank statements and other investments. The reason for this is that lenders want to know what is your behavior when it comes to investments and seeing them through. If you want several months' worth to reserve mortgage payments, then typically lenders request this.
If you receive money from your family, you may need to make this official in the form of a gift letter. It shows that the money you received from them is a gift and it is not considered a loan.
Proof of who you are typically requires a photo ID. This shows that you are who you are claiming to be and that you’re not assuming another person’s name.
If you’re a reliable borrower at all, lenders want to see your credit report or score. Of course, you will consent to this, but showing how much you’ve repaid loans in the past is a great precursor that you’re able to meet these debts too in the future.
This shows how much has been withdrawn and pledged into your pension account or 401k, if you’re of retiring age and you have a hefty pension, you can use these as proof of income when it’s time to take out a home loan.
Take the First Step
Take the first step in taking a home loan by securing your proof of income. We can help you with that with our online paystub generator.