You only get one chance to make a fantastic first impression on a prospective lender, and you want to be present yourself as organized, responsible, and prepared. Fumbling your way through the application process isn’t going to project the image you want. Before you begin the preapproval or approval process, ask yourself: What do I need to apply for a home loan?
What Do I Need to Apply for a Home Loan?
While the exact forms and documents that you’ll be asked to produce may vary depending on your situation, the basic requirements are fairly standard. That makes it relatively easy to predict what a lender will ask for, so you can go ahead and get the necessary items together and be ready to show off your efficiency and competence as you breeze through the application process. What do I need to apply for a home loan? If you’re asking that question, start gathering the following items:
Identification
Lenders like to be sure of who they’re dealing with. As The Ascent notes, you’ll want to have government-issued photo identification on hand. It could be a driver’s license or a passport. They’re certain to require your Social Security number, and it’s not unusual for a lender to request a look at your Social Security card, so you may want to have it available as well.
Credit
Your credit history will play a key role in your future home loan. When you reach out to a lender about a loan, they ask for your permission to pull your credit history, according to Credit Karma. Ideally, you should have already done this so that you know what they’re going to see and are prepared to explain any negative events. Lenders want to know that you’re financially responsible and committed to repaying your obligations, so be ready to make the case that you manage your money well and are prepared to handle the payments for this loan.
Income Verification
Since lenders want to be assured that you have the funds needed to repay the home loan that you’re seeking, it’s only natural that they’ll ask for documentation relating to your income. Depending on your situation, the nature of that documentation can vary. U.S. News and World Report offers a breakdown of some common requests:
- Tax Returns: The lender may wish to see the income reported and deductions claimed. They may accept copies of your returns or ask you to sign Form 4506-T, which allows them to request the information directly from the IRS.
- W-2s: Reviewing W-2s for two years lets a lender check the stability of both your income and your employment.
- Pay Stubs: Some lenders prefer recent data, so they’ll request pay stubs for the last 30 days.
- Self-Employed Individuals: Freelancers, independent contractors, and other self-employed people won’t have W-2s and pay stubs, so they’ll need to be ready with other documentation that effectively demonstrates their income.
- Child Support or Alimony: When this type of income is a factor that you’re relying on, you’ll need to have the court order and evidence that it is paid regularly to present to the lender.
Assets and Debts
As Investopedia explains, you’ll be asked to list monthly debt payments, including auto loans, student loans, and credit cards. That’s because the lender wants to make sure that your debt-to-income ratio isn’t too high. You’ll also be asked to provide a listing of assets like bank and investment accounts. Don’t be surprised if you are expected to provide statements for these items.
Gift Letters
Did friends or family members give your down payment fund a substantial boost? Cash gifts are generally acceptable as long as they are properly documented as gifts. As U.S. News and World Report notes, you will need to get your friends or family members to sign a gift letter stating that the monies are gifts rather than loans.
Renting History
First-time homebuyers may be asked to show documentation of the previous year’s renting history. As Credit Karma indicates, proof of consistent, on-time payments can be especially helpful for borrowers who don’t have an extensive credit history.
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Are you ready to apply for a home loan? Don’t let questions hold you back. Reach out to PrimeLending Dallas. Our friendly team will be happy to guide you through the process. Contact us today to get started.