Ultimate Mortgage Preapproval Checklist

When a lender preapproves you for a mortgage, they’re confirming that you’re financially positioned to handle a home loan and can afford the monthly payments. A mortgage preapproval – referred to by Rocket Mortgage^Ⓡ as initial mortgage approval – also determines how much you can borrow, so it’s important to get preapproved early on in the home buying process.

Before a lender can preapprove your mortgage application, they’ll need certain documents to verify your income, job stability and other aspects of your finances. A mortgage preapproval checklist can help you stay organized and ensure you have everything you need for the process ahead.

What Do You Need For Mortgage Preapproval?

Unlike with prequalification, you’ll need to submit some documentation before you can receive a mortgage preapproval. Most of this will be standard financial paperwork that’s required of all borrowers, but you may be asked to provide additional information depending on the type of loan you’re seeking, the residence you wish to buy and the work you do.

For a mortgage preapproval, borrowers will need to have some or all of the following items ready to go:

1. Personal identification
2. A Social Security card
3. Pay stubs
4. Bank statements
5. Tax documents
6. Investment account statements
7. A list of monthly debts
8. Rental information and landlord references
9. Gift letters
10. Their credit report

Again, just to be clear: Not all of the items on this list – important as they may be – apply to all borrowers.

10 Documents Needed For Mortgage Preapproval

Now that you know the information you’ll need to apply for your mortgage preapproval, looking at each item in greater detail can be helpful.

1. Personal Identification

The mortgage lender will want to make sure they’re lending to the right person – and not someone pretending to be you – so a valid form of identification will be required. It must be government-issued and include a photo. Acceptable forms of ID include a state-issued driver’s license or ID card, passport or U.S. alien registration card.

2. Social Security Card

Your Social Security card is another form of identification that your lender may request. It helps match your Social Security number with your picture ID to further confirm it’s you who’s getting the loan. You’ll also need to supply your Social Security number to run a credit check.

3. Pay Stubs

Your most recent pay stubs show proof of employment and help verify you have enough income to buy a home. If you’re paid with a physical check, you should have the actual stub, which you can copy and send to the lender. If you’re paid through direct deposit, your company should have electronic copies of your stubs. You may also be able to request electronic copies from your bank.

4. Bank Statements

Bank statements are required for obtaining preapproval because they help verify your income and show that you can afford your down payment. These statements may also uncover any red flags, such as bounced checks, insufficient funds, unstable income, payments to other bank accounts, and large deposits from unknown sources.

You’ll likely be asked for checking and savings account numbers, along with statements for each bank account you’ve used for the previous month or 2.

5. Tax Documents

Certain tax documents, including your two most recent W-2 forms, are also among the documents you’ll need for mortgage preapproval. These documents are another way to verify your income and show how much you had taken out in taxes. You’ll likely need to provide W-2s for any employers you’ve worked for in the past 2 years.

While you should keep a copy of your tax returns and W-2s, you may be able to request tax transcripts and tax returns from the IRS if you’re missing anything. If you used a tax preparer or tax software to file your taxes, they might also have copies.

6. Investment Account Statements

Savings and checking accounts aren’t the only places people keep their money – and your job may not be your only source of income. Lenders want to see all of your income and assets, which means they’ll also need to review your investment account statements.

These account types include 401(k)s, 403(b)s, IRAs, stocks, bonds and mutual funds.

7. List Of Monthly Debts

Your debt-to-income ratio (DTI) helps lenders decide whether you can take on more debt and repay it on schedule. DTI shows your gross monthly earnings versus the sum of your monthly debt payments. The maximum DTI allowed for mortgage approval varies with the type of loan you’re seeking.

Your lender will ask for a list of your fixed debts, which are those that are regular, recurring and have a minimum required payment. These debts may include:

• Rent or mortgage
• Car loans
• Student loans
• Credit cards
• Personal loans
• Homeowners insurance

Keep in mind that a Verified Approval¹ from Rocket Mortgage® will follow some of these same steps when it’s time to assess your financial situation. We’ll look at your DTI and credit score to ensure you’re qualified for a home loan. One of our underwriters will also review your information.

8. Rental Information And Landlord References

Lenders want to be assured you’ll make your monthly mortgage payments on time. If you’re a renter, you’ll likely be required to show a history of on-time rent payments.

You may also be required to include the names and contact information of your previous landlords. This will help the lender verify you’ve upheld your financial responsibilities as a tenant. How far back you’ll need to show payments or landlord information will depend on your lender.

9. Gift Letters

If a loved one gives you money to use as a down payment, you’ll need a gift letter to prove the money isn’t a personal loan requiring repayment. If it was a personal loan, it would add to your DTI and possibly make it harder for you to pay back your mortgage.

A typical gift letter will include:

• The donor’s name, contact information and relation to the recipient
• The recipient’s name and contact information
• The gift amount and date the gift was or will be received
• How the recipient will use the gift money
• Confirmation that the gift doesn’t need to be repaid
• Signatures of the donor and recipient

Know The Gift Money Rules

Certain loan programs have rules regarding who you can receive gift money from. For example, conventional loans only allow gifts from family members, but Fannie Mae and Freddie Mac also allow godparents, domestic partner relatives and former relatives to give gifts. Federal Housing Administration (FHA) loans allow gifts from employers, labor unions, most family members, and first-time home buyer programs.

10. Credit Report

Your credit report will provide insight into the type of borrower you are and how well you handle different types of debt. It will reveal any late or missed payments, significant debts and past bankruptcy. Lenders will also use your credit report for determining your mortgage rate and the amount they’ll approve you for.

While the lender pulls the report on their own once they have your permission, it’s wise to review your credit score beforehand to make sure you’re in a good position to qualify for a loan. This will also allow you to spot and fix any errors.

Additional Documents You’ll Need If You Already Own A Home

If you already own a home and are applying for a mortgage to purchase investment real estate or a vacation property, you’ll need to provide recent mortgage statements for your current house. This will show the equity in your home, along with your principal balance and monthly payment.

These documents will also help the lender determine your DTI and whether you can afford an additional mortgage payment. They’re especially important if you have a loan on your current home and this will be an additional mortgage.

Additional Documents You’ll Need If You’re Self-Employed

If you’re applying for a mortgage while self-employed or owning a business, you’ll also be required to provide your tax documents and business returns for the past 1 to 2 years, depending on your lender’s requirements.

You’ll also need to show your year-to-date audited Profit and Loss statement. If you can’t obtain that statement, you can provide a year-to-date unaudited Profit and Loss statement, along with your most recent 60 days of business bank statements.

Additional Documents You’ll Need For Nonconventional Loans

The documents listed above are typically required for both conventional and nonconventional loans. However, some nonconventional loans may require additional documents for the mortgage process.

For example, since only certain types of people (veterans, active-duty military members, those who’ve served in the National Guard and Reserves, and surviving spouses) are eligible for a VA loan, you’ll need to provide further documentation to verify your eligibility. Depending on the borrower, such forms may include:

• DD Form 214: This verifies your military discharge, retirement or separation and is required for veterans. Surviving spouses must provide their spouse’s DD Form 214, along with their marriage license and spouse’s death certificate.
• Retirement Points Statement (NGB Form 23): This form confirms the number of years of military service, including time spent attending drills and going through training. Discharged members of the Army National Guard need a Retirement Points Statement.
• Statement of service: A statement of service proves active military status for active-duty service members or current National Guard or Reserves members. It must be printed on official military letterhead and include the service member’s full name, date of birth, Social Security number, entry date of duty, and time lost. It may also include years of service, date of activation, orders activated, training status and the name of the commander providing this information.

The Bottom Line: Take Steps To Prepare For Mortgage Preapproval

A mortgage lender wants to make sure you’ll be able to pay back your loan and aren’t too much of a lending risk. To feel confident about this, they’ll need to verify your income, credit, assets and debts before issuing you a mortgage preapproval.

It’s best to prepare all of this documentation before starting the mortgage process so you’ll have the information your lender requires, and you can quickly progress to the next step of your journey to homeownership.

If you’re ready to dive into the home buying process, start the application process today.

¹ Participation in the Verified Approval program is based on an underwriter’s comprehensive analysis of your credit, income, employment status, debt, property, insurance and appraisal as well as a satisfactory title report/search. If new information materially changes the underwriting decision resulting in a denial of your credit request, if the loan fails to close for a reason outside of Rocket Mortgage’s control, or if you no longer want to proceed with the loan, your participation in the program will be discontinued. If your eligibility in the program does not change and your mortgage loan does not close, you will receive $1,000. This offer does not apply to new purchase loans submitted to Rocket Mortgage through a mortgage broker. This offer is not valid on jumbo loans or for self-employed clients. Rocket Mortgage reserves the right to cancel this offer at any time. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change at the sole discretion of Rocket Mortgage. Additional conditions or exclusions may apply.