What Documents Are Needed For A Mortgage?
The Bottom Line: Organizing Your Mortgage Documents Saves Time And Energy
Mortgage application documents for self-employed borrowers
Today, traditional lending programs require income tax forms to verify income. However, other programs use bank statements to determine income for self-employed applicants. Here are the requirements you may face as a self-employed borrower.
- Two years (or more) of tax personal tax returns
- Two years (or more) of business tax returns
- Copies of personal and business account bank statements (two or three months for traditional underwriting, up to 24 months for bank statement loans)
- Copies of business licenses and/or corporate filings
- Statement from accountant or CPA about the health of your business
- Letter of explanation for uneven or declining business income
- Partnership tax returns and/or schedule K-1
Underwriters use a complicated form to adjust self-employment income, adding back deductions for items such as depreciation or depletion, because they don’t come out of your bank account, and subtracting expenses that were not deducted on your tax returns, for instance the 50 percent of business meals that you did not get to deduct on taxes are subtracted from your taxable income because you did spend the money.
Mortgage documents for unearned income
For income that is not related to employment, you may encounter a wide variety of required forms.
Investors get the same treatment that self-employed borrowers get. if you have a rental home, you must supply tax returns to show your income. That information goes into a different section on the loan application, unless your rental income appears on a business tax return. Other unrearned income documentation requirements include:
- Social security form SSA-1099, award letter or bank statements confirming direct deposit
- Pensions, form 1099-P, award letter for pension, or bank statements confirming direct deposit
- Disability, child support, alimony or public assistance require documents proving amount and duration
- Forms 1099-INT for interest income or 1099-DIV for dividend income
- Form 1099-B for capital gains from brokerage accounts
- Tax returns and supplementing documents may be used to document all unearned income
These are the most common types of income. But for any kind, the requirements are pretty uniform. You must show that you’re entitled to the income – for instance, with a letter from a government agency, a divorce decree, or the private insurer.
You must show that this income is expected to continue for at least three years, and that you are receiving it reliably. Bank statements confirming deposits or canceled checks cover this requirement.