Applying for a mortgage used to be easy: You'd complete an application and the lender would pull your credit score. More often than not, you'd be approved.
But nowadays, lenders require paperwork that documents every facet of your financial life: taxable income, assets, rent payments and more.
And there's no escape. Every borrower must survive what mortgage specialist Joe Metzler describes as "the flaming hoops of loan underwriting."
"Even if you are the most perfect (borrower), expect that you might still get singed going through," says Metzler, who heads Mortgage Unlimited, in St. Paul, Minn.
Four mortgage professionals offer the following list of items you may need to document income.
Paycheck stubs, W-2s
Loan guidelines typically specify one month of verified income. You can prove this with paycheck stubs. Employees paid electronically may be able to access a corporate website to print out paycheck stubs.Guidelines typically require the most recent Form W-2, but some borrowers are asked for two years of W-2s.
"If your loan hasn't closed by the time that new W-2s should be received by the employees, then (the lender) may ask for that, certainly," says Julie Miller, a sales manager at Prospect Mortgage, in Irvine, Calif.
Bank, investment and tax documents
Borrowers generally must supply bank and investment account statements for the last 30 days. An application for a jumbo loan could trigger a request for up to three months of statements.In the past, only self-employed borrowers who went through full underwriting typically were required to present income tax returns. Today, almost everyone is expected to provide a recent tax return, including all the pages and schedules.
Borrowers also must sign IRS Form 4506-T, which allows the lender to get a transcript of the tax return from the IRS. This practice "has become an industry standard as fraud prevention," says Brad Blackwell, national sales manager at Wells Fargo Home Mortgage.
Tax returns are scrutinized for unreimbursed employee business expenses, self-employment business losses and telltale signs of loan fraud, such as reported income that doesn't match an employee's W-2.
Don't try to amend a prior year's tax returns to show more income. That's now a no-no.