Documents Needed for Mortgage Pre-Approval: A Checklist

Mortgage loan application rates declined to 4.3% in October 2023. Due to this, around 86% of home sellers prefer buyers who have pre-approval for a mortgage. To get a mortgage pre-approval letter, there are some documents needed for this process. It includes credit score, personal identification, pay slips, etc. 

The lender then assesses all those documents and offers you the final loan amount. However, there are more documents needed apart from the ones mentioned before; here is the consolidated list of documents.

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What Is Mortgage Pre-Approval?

It’s a process where a lender checks your finances and gives you the green signal for a home loan. They also check your credit score and income stability. This also helps the lender determine if you are eligible for the mortgage application process. 

Once the pre-approval process is done. The lender offers you a preapproval letter for a mortgage. This letter specifies the type of loan, the interest rate, and the loan amount.

✍️ What is mortgage pre-qualification? It is the process by which a lender assesses your financial situation. They will calculate the maximum amount you might be eligible to borrow for a home loan. Moreover, being pre-qualified doesn’t guarantee loan approval or financing.

>>What’s My Home Worth? Get the home value estimate of the future property and determine how much loan you are eligible for.

Documents Required for Mortgage Pre-Approval

Here are the documents needed for a mortgage pre-approval verification process. Accordingly, it will help the lender easily grant you a loan.

Identification Documents

• Govt. ID: You require government-issued photo identification, such as a driver’s license or passport. It helps to verify your identity.
• Social Security Number: You will also need your social security number. This helps offer personalized loan options based on your credit history.

Employment and Income Documents

Employment and income records used by lenders help to confirm your stability, income, and work history. The following documents are: 

• Pay slips: Submit your most recent payslips. It will help lenders examine your financial stability, as mentioned on the payslip, to determine the loan amount you qualify for. 
• Bank Statements: Lenders will ask you to submit bank statements, which will help to verify your income. They will also check whether you’ll be able to pay the down payment. 
• Tax Documents: Include W-2 forms or tax returns to provide detailed income and deduction records for the lender’s assessment.

Assets and Documents

Mortgage pre-approval also requires asset and debt documentation to assess your financial situation.

• Account Statements: Provide account statements from the last 2-3 months for 401(k)s, IRAs, CDs, mutual funds, or other investment or retirement accounts.
• Loan Statements: To get pre-approval for a mortgage, you need to provide loan statements from the last 60 days. It could be auto loans, credit cards, personal loans, etc.

Other Documents

Here are some other documents lenders could ask for:

• Gift Letters: Attach proof of funds from a friend or family member used towards a down payment or any other expenses. This provides lenders with assurance about the fund’s authenticity.
• Credit Report: After they have your social security number and your consent, your lender will pull your credit report directly. It will help them assess your eligibility for your loan. 
• Rental Details: To receive a pre-approval letter, submit information about your past rentals as well as the landlord’s details.

Additional Documents in Special Circumstances

Pre-mortgage approval requires some additional documents: 

• Already Own a Home: If you already own a house and are looking for a second loan. You need to provide your recent mortgage statements for your current home. These loan documents will showcase your principal balance, home equity, and average monthly payment. 
• Non-conventional Loans: These loans include government-backed loans such as VA, FHA, and USDA loans. 

1. In the case of these loans, you need to provide your current employment status and history. 
2. For veterans, you need DD 214 to verify your military discharge, separation, or retirement. For surviving spouses of veterans provide a spouse’s DD Form 214, marriage license, and death certificate.

Bottom Line

It is in your best interest to submit all of the aforementioned documents for mortgage pre-approval. This gives lenders a thorough understanding of your financial circumstances. This proactive approach will also improve your position when submitting offers on properties and speed up the loan approval process.

FAQs

• Mortgage Pre-approval