Two Women Applying For A Mortgage
Two Women Applying For A Mortgage

Everyone knows you get better mortgage loans if you have good scores. Some people also know that the lower the LTV (loan-to-value ratio or, put another way, the bigger the down payment) the better the rate. Or that your credit history and employment history affect the kind of loan and, therefore, the interest rate, you get.

Few people, however, know all that’s involved in applying for a mortgage. If you’re among them, this article will help.

How To Apply for Mortgage Loans

When you apply for a loan, you are asking a lender to take a good look you and determine how much of a risk you are to them, how much money can they trust you with.

To do that, they want a number of documents from you. Some of the documents are required no matter what, others are required for some loans but not for others.

The faster you provide all documents required, the faster you get to close on your loan.

When interest rates are rising, that means you get a better rate or the same rate for a lower price. When interest rates are going down, the opposite is true. However, even when they are going down, being slow can cost you in rate lock extensions.

Loan Documents Required of Residential Mortgage Applicants

The following table covers document requirements for loans most people apply for (conventional conforming loans and FHA, VA or USDA loans) based on how people earn their money:

Wage Earners Self-Employed
current photo ID, front only

(for government-backed loans, social security card copy, front only)

if permanent resident, copies of Alien card (back and front)

if neither a citizen nor a permanent resident, copy of passport and Visa or employment card or ITIN card or IRS ITIN letter.

current photo ID, front only

(for government-backed loans, social security card copy, front only)

if permanent resident, copies of Alien card (back and front)

if neither a citizen nor a permanent resident, copy of passport and Visa or employment card or ITIN card or IRS ITIN letter.

copies of pay stubs for the last 30 days year-to-date profit and loss statement (for some loan program / lenders, they may be self-prepared, for others they must be prepared by an accountant)
copies of bank statements for the previous 2 months (to show you have the funds required for down payment and/or closing costs copies of bank statements for the previous 2 months (to show you have the funds required for down payment and/or closing costs
copies of W2’s for the previous 2 years proof that self-employment has existed for at least 2 years (letter from your accountant, copy of business license) and, if you own a company, proof of shares in the company
tax returns for the previous 2 years tax-returns for the previous 2 years

Yes, there are 1-year programs and programs where income is calculated based on W2’s only. But you don’t know from the beginning if you qualify for such a program, so it’s best to be prepared.

If you are applying for an ITIN loan, your credit report must have only the ITIN number, no social security number… or most lenders, maybe all, will not consider you.

That means: if you’ve used someone else’s social security number you will not get a loan; if the credit bureaus are reporting someone else’s info on your report, you need to fix it.

If you own a property already (and are not selling it prior to getting the new loan), you will also need:

  • the last mortgage statement for all mortgages
  • the last property insurance bill you got for every property you own (if you own properties that have no insurance, you will have to obtain coverage)
  • the last homeowner’s association bill you got for every condo you own.

Your credit worthiness is proven through credit reports. Your loan officer will get those, as soon as you give them permission to do so.

Documents Required for Other Loan Types

Conventional loans come in many shapes. As far as lenders are concerned, loans are products; the more types you have, the more loans you can give, the better off you are.

Bank Statement Asset Depletion Cash Flow
current photo ID, front only

if permanent resident, copies of Alien card (back and front)

if neither a citizen nor a permanent resident, copy of passport and Visa or employment card or ITIN card or IRS ITIN letter.

current photo ID, front only

if permanent resident, copies of Alien card (back and front)

if neither a citizen nor a permanent resident, copy of passport and Visa or employment card or ITIN card or IRS ITIN letter.

current photo ID, front only

if permanent resident, copies of Alien card (back and front)

if neither a citizen nor a permanent resident, copy of passport and Visa or employment card or ITIN card or IRS ITIN letter.

bank statements from one account for 12 or 24 months statement that shows the value of the asset rent roll
profit and loss for the 12 or 24 months the bank statements cover (depending on lender, they may be have to be prepared by a CPA) proof that you own the asset (often the same statement that shows the value) property operating statement (year-to-date and previous 2 years)
proof that you can liquidate early

If you own real estate already, you will also need:

  • the last mortgage statement for all mortgages
  • the last property insurance bill you got for every property you own (if you own properties that have no insurance, you will have to obtain coverage)
  • the last homeowner’s association bill you got for every condo you own.

Lenders may require additional documents, but the above will get you started with most common loans.