Documents Needed For A Mortgage Preapproval: A Complete Checklist

Getting preapproved for a mortgage has plenty of benefits. You can find out ahead of time how much you’ll be approved for and what interest rate you can get. Additionally, preapproval can make your offer stronger and help you stand out in a competitive real estate market.

The preapproval process requires a lender to look at your income, assets, credit score and other aspects of your personal finances. During this process, you’ll have to provide a variety of documents and information to your lender.

Are you planning to buy a home soon? Keep reading to learn the documents needed for mortgage preapproval and how you can be as prepared as possible.

Types Of Documents Needed For A Mortgage Preapproval

Mortgage preapproval is the process of determining how much money you can borrow with a mortgage, as well as the likely interest rate you can borrow it at. Lenders offer preapproval based on certain financial information you provide.

To begin the process of preapproval, your lender will want to see a few standard documents from you. They may require other information or records as well, depending on what type of loan you’re applying for and the type of residence you plan to purchase. Here are a few general documents you should prepare for any mortgage preapproval:

Personal Identification

First, your lender will need to see a government-issued identification. These documents allow the lender to verify your identity so they can be sure they’re lending to the right person. Here are some valid forms of personal identification:

• Driver’s license
• Passport
• Social Security card
• Individual Taxpayer Identification Number (ITIN)
• Federal or state-issued ID card

Proof Of Income

One of the most important things you’ll have to provide your lender is proof of your income. When a lender decides how much you can borrow, it does so based on your income and your ability to repay. The higher your income, the more you can borrow.

Here are some documents your lender may ask for to verify your income:

• Pay stubs from the past month
• Two recent bank statements

For self-employed borrowers, the requirements may be slightly different. Unlike traditional employees, you may not have pay stubs or W-2 forms from your employer. Instead, you may be required to provide business documents such as profit and loss statements, as well as your recent tax returns.

Tax Documents

Along with the income documents we mentioned above, you’ll also be required to provide certain tax documents. Those documents include:

• W-2s from the last 2 years
• Tax returns from the last 2 years
• Form 1099 (if working as an independent contractor)

Like your pay stubs and bank statements, these tax documents allow your lender to verify your income and employment.

Asset Documents

Beyond your bank statements, your lender will ask you to provide documentation of any other assets you have. These assets work in your favor when you apply for a home because they show evidence of cash reserves. In other words, if you lost your job after you got a mortgage, large cash reserves would show that you could continue to make your mortgage payments.

Here are some assets you may provide documentation of:

• Savings accounts
• 401(k) plans
• Individual retirement accounts (IRAs)
• Certificates of Deposit (CDs) 
• Taxable brokerage accounts

Your Credit Report

Your credit report and credit score are two important factors lenders consider when preapproving you for a mortgage. This information shows lenders whether you’ve used debt responsibly in the past and how likely you are to make your mortgage payments (and do so on time).

Generally speaking, the better your credit report and higher your credit score, the more likely you are to be preapproved for a mortgage and the better the interest rate you’re likely to be approved for.

You won’t actually have to provide a credit report to your lender. Instead, you’ll just give your lender consent to run a credit check and view your credit score.

List Of Monthly Debts

Just like you have to provide documentation for your income and assets, you must also provide documentation of your debts. Your debt payments help your lender calculate your debt-to-income ratio (DTI). Your DTI helps lenders determine whether you can fit a mortgage payment into your monthly budget.

Here are some examples of debts you would provide documentation for:

• Mortgage or rent
• Credit cards
• Student loans
• Auto loans
• Personal loans

Additional Documents You May Need For Preapproval

In addition to the documents listed above, there are others you may need to provide in special situations. These documents aren’t required for everyone. Instead, you’ll only have to provide these if your circumstances require it:

• Gift letter: If a loved one has gifted you the money for your down payment, you will be required to provide a gift letter. In this letter, the person who gave you the money confirms they provided the money and that they don’t expect to be repaid.
• Rental history: If you currently rent a home or apartment, your lender is likely to want to see your rental history before preapproving you for a mortgage. Your lender will want to see a history of on-time rental payments.
• Divorce decree or court order: Having been divorced shouldn’t affect your ability to buy a home. However, you may be required to provide your divorce decree or court order to your lender to verify alimony or child support payments.
• Bankruptcy or foreclosure information. If you’ve previously gone through bankruptcy or foreclosure, it could affect your ability to buy a house now. When you apply for mortgage preapproval, you’ll likely have to provide information about those events to your lender.

FAQs About Documents Needed For Preapproval

Before you apply for mortgage preapproval, be sure to read the answers to these frequently asked questions:

What information do I need to get preapproved for a house?

To get preapproved for a house, you’ll need to provide information about your employment, income, assets, debts and credit history. Depending on your situation, you may also need to provide additional information, such as a gift letter or business documents.

How many pay stubs do I need to get a mortgage?

You’ll typically need to provide your last two pay stubs to get preapproved for a mortgage. However, depending on your lender and your situation, you may be asked to provide more.

Are mortgage preapproval and prequalification the same thing?

Each lender is different, and some may use the terms preapproval and prequalification interchangeably. But generally speaking, preapproval is a more in-depth process where a lender does a deep dive into your finances. Prequalification is based only on the information you provide and may not be as reliable.

The Bottom Line

Mortgage preapproval is one of the most important steps in buying a house. Getting preapproved before making an offer on a home can help you set your budget and can make your offer more attractive to a seller. If you’re getting ready to buy a house, start an application for a mortgage today to get preapproved.