Acceptable Forms of Income Documentation

Many people want to know what forms of income documentation are acceptable to a lender for obtaining a mortgage? There are many forms of income documentation that can be acceptable to use for obtaining a mortgage, however, it depends on which lender and what type of mortgage program you are trying to obtain mortgage financing on. For example a hard money lender will probably accept different form of income documentation than a subprime lender lender, and a subprime lender will probably accept different forms of identification than a conforming lender.

The standard acceptable forms of documentation for a full documentation conforming mortgage would be last 2 years W-2 statements, 2-4 most recent paycheck stubs, any bank statements and or financial account statements and mortgage payment history.

Preparing your documentation prior to meeting with your mortgage broker is a good idea. Having all proof of income and assets available is great time saver for all parties involved.

The amount of income documentation that the lender requires is dependent on your loan product. The standards range from full documentation to no documentation and even vary between lenders.

Your lender may score your loan through an automated underwriting system. If he or she does, ask for a copy of the feedback. This will tell you what exactly is required as far as income documentation. Sometimes a Verbal verification of employment(voe) is all that is required, and other other times more extensive verification is required.

In some cases, banks accept checking and savings account statements showing periodic direct deposits as proof of income in lieu of payroll software generated paystubs.

If you are a self employed borrower whose business tax returns are more reflective of your true income than your personal tax returns, consider applying for a program which allows business tax returns as acceptable forms of income documentation.

» DISCLAIMER: The information contained in this article on 'Acceptable Forms of Income Documentation' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.