What Do You Need for a Mortgage Preapproval?

If you’re getting ready to buy a home in Washington State, one of your first steps is getting preapproved. And to be truly preapproved — not just prequalified — you need to provide documentation that backs up your income, assets, and credit.

A preapproval letter is only as strong as the file behind it. If your loan originator hasn’t asked for supporting documents, you’re likely prequalified, not preapproved. There’s a meaningful difference — especially when you’re competing for a home. (Here’s a full breakdown of what each level means.)

Below is a checklist of what you’ll typically need to provide, organized by situation. It’s possible that exceptions may be made on a case-by-case basis.

I prefer to have a discovery call with potential clients before they gather documents for me as we may not need everything that’s shown on the list below (or sometimes we may need more documentation). For example, it’s possible that we may only need to go back one year with tax returns and W2s, depending on your personal scenario and the selected loan program.

Most Everyone

• Two years of W-2s from all employers.
• Paystubs covering the most recent 30 days of income
• Bank statements — all pages — for checking, savings, and any asset accounts you’re using for down payment and closing costs. Large deposits that aren’t clearly payroll will need to be sourced and explained.
• Driver’s license or government-issued ID
• Credit report — your lender will pull this directly. Most start with a soft pull before the full pull.
• Completed loan application. The loan application requires a 2 year history of employment (formal education may be included), including the name, address and phone number of employers along with your job title. Two years of residences is also needed for the application.

If You’re Self-Employed

• Two years of complete personal tax returns (all pages and schedules)
• Two years of complete business tax returns (all pages and schedules)
• Year-to-date profit and loss statement

If you’re self-employed, it’s possible that other types of income documents may be used in lieu of tax returns, such as bank statements.

If You’re Paid Commission, Bonus, or Overtime

• Two years of complete personal tax returns — variable income needs a two-year history to be used for qualifying

More information on commission, bonus or overtime income and on using RSU income for qualifying for a mortgage.

If You Have Investment or Rental Properties

• Pages 1 and 2 of your 1040, along with Schedule E — some lenders will require the complete return (I would actually plan on providing the entire tax return).
• Current lease agreements for any rental properties
• Current mortgage statements for all properties
• Copies of insurance binders

If You Pay or Receive Alimony or Child Support

• Complete divorce decree and/or child support order

If You Receive Social Security or Disability Income

• 1099Rs
• Award letter documenting the benefit amount
• Documentation showing the income is expected to continue
• Three months of bank statements showing receipt of the deposits

If You’re a VA Buyer

• Certificate of Eligibility (COE) and/or DD-214

If You’re Using Gift Funds

• Gift letter from the donor stating the funds are a gift and not a loan. Often the lender has a form letter that will be provided.
• Documentation showing the donor has the funds — typically a bank statement from the gifting party

A Few Things Worth Knowing

Bank statements means all pages. Even if page 4 of 4 is blank, lenders need the complete statement. Incomplete statements will slow things down.

Large deposits get scrutinized. Any deposit that isn’t clearly identifiable as payroll will need a paper trail. Cash deposits are particularly difficult to document — if you’re planning to use cash toward your down payment, talk to your loan originator early.

Don’t close credit accounts or take on new debt while you’re in the preapproval process. Either can affect your credit scores or your debt-to-income ratio. When in doubt, ask first.

The list above covers the most common scenarios, but your situation may require additional documentation. The AUS (automated underwriting system) findings will specify exactly what’s needed for your loan, and your loan originator will walk you through any additional requirements.

Ready to Get Started?

I’ve been helping Washington State homebuyers get preapproved for over 25 years. If you’re ready to put together your file — or just want to know where you stand before you start gathering documents — let’s talk.