Lender Documentation Requirements

There are many documents lenders require, whether purchasing or refinancing a home. The amount of documentation required varies by lender and, at times, can be very intimidating to someone unfamiliar with the process. This is especially true now as lenders toughen up their standards in light of the recent financial crisis

Documentation requirements are different for someone who is self-employed, and are usually more stringent. For the self-employed, you may be required to provide personal Federal Income Tax Returns including Schedules for the last two years. Business owners will need to provide Business Federal Income Tax Returns for the last two years. Profit and Loss Statements for the current year and 1099 Statements may also be required. For income verification you will need two of your most recent pay stubs as well as your most recent two years of W2s. It is also important to remember that your lender will need to verify your employment, so be prepared to provide your company’s Human Resources Department contact information.

If you have rental property income, in addition to your Federal Income Tax Returns with Schedules, you may need to provide your lease agreements. Additionally, while the bank is not allowed to inquire if you receive child support, they can inquire if you pay it, and you may be required to supply your payment history.

For pension as well as social security income, you may be asked to provide two years of 1099s. The bank may also require documentation from your pension provider stating payment amount and frequency, and/or the most recent award letter with the dollar amount you will be receiving from your social security. If you have an annuity, the quarterly statement with account balance is usually adequate. You will also be required to protect your home with homeowner’s insurance. Be sure to provide your agent’s name, address, and phone and fax number to your lender.

Finally, you will be asked to provide two months of bank statements from checking/savings, any investment account statements, stock certificates, and statements for life insurance, but only if the life insurance has cash value.