If you’re a first-time buyer, you may be feeling a bit overwhelmed by the homebuying process. After all, there are a few hoops to jump through. One of the most important and, often, somewhat daunting steps involves locating and gathering all of the necessary paperwork.
For organizational purposes, many finance professionals swear by what’s called a homebuying process checklist. This file lays out exactly which documents you’ll need to track down, so you can check them off one-by-one. The Mortgage Reports even offers a printable, PDF version, for ease and convenience. Your mortgage professional will help walk you through this too.
If you’d like to read up on the requirements before you dive in, though, we’ve compiled a comprehensive guide to the homebuying process checklist. Here are the types of documents you’ll need to purchase a home:
Employment/Income Documentation
Income information is critical to mortgage lenders because it helps paint a clear picture of your ability to repay the loan. In the same vein, proof of employment clarifies the level of risk you present as a borrower. When lenders see strong, consistent employment and income history, you become a safer bet.
If you consult, freelance or do gig work, keep in mind that this won’t necessarily prevent you from getting a mortgage. You may just need to provide additional documentation or, in some cases, use a co-signer.
The exact documents requested will vary depending on your lender and your unique financial situation, but most homebuyers will benefit by gathering:
- Names, addresses, phone numbers and dates of employment for all employers over at least the last two years
- 30 days’ worth of paystubs or most recent leave and earnings statement (LES)
- W2s for at least the last two years
- Copies of any social security, pension and/or retirement award letters and corresponding 1099s
- Explanation letter for any significant employment gaps
If you’re self-employed or a recipient of commission or rental income, you should also locate:
- Personal tax returns for at least the last two years
If you own a business, you should also locate:
- Business tax returns from at least the last two years
If you’re divorced, you should also locate:
- Divorce decree and settlement paperwork for separate maintenance
Asset Documentation
If you were to lose your job or other income, you could leverage your assets to continue making mortgage payments. Essentially, the lender wants to know that their investment would be in good hands, even if you were to experience a lapse in income.
If you don’t have any assets just yet, don’t worry! This is only one piece of your full financial picture.
The exact documents requested will vary depending on your lender and your unique financial situation, but most homebuyers will benefit by gathering:
- 60 days of bank statements for any checking and savings accounts
- 60 days of statements for any investment and retirement accounts
If your current assets already include real estate, you should also locate:
- Documentation related to the transaction
Personal Information Documentation
In addition to income and assets, the lender will need to learn a little bit more about you as a borrower. Some of this information will be used to verify your eligibility to purchase property in the US, while others are used to track anti-discrimination efforts.
The exact documents requested will vary depending on your lender and your unique financial situation, but most homebuyers will benefit by gathering:
- Some basic information including name, date of birth, current address and phone number
- A government-issued ID like a driver’s license or passport
- Social Security numbers for all applicants
Keep in mind that Social Security numbers will be used for a credit check so, as you’re gathering these documents, consider checking your credit score as well.
- Previous addresses for at least the past two years
- State where you plan to purchase
- Number and age of dependents
- Race and Ethnicity information (for government monitoring – requested on all mortgage loans)
When it comes to mortgage lending, Race and Ethnicity are only used to monitor compliance with anti-discrimination laws. If you believe you are a victim of mortgage discrimination, you should promptly file a complaint with the Consumer Finance Protection Bureau (CFPB).
Property Documentation
The lender will also need some information regarding the home purchase they are considering funding. For this step, you’ll need to work closely with your buyer’s agent and potentially the seller’s agent.
The exact documents requested will vary depending on your lender and your unique financial situation, but most homebuyers will benefit by gathering:
- Purchase contract accepted and signed by you and the seller
- Your homeowner’s insurance agent’s name and contact information
- Appraisal showing the home’s value is at least the purchase price
Keep in mind that your lender will likely order the appraisal but having the paperwork on hand will never hurt.
If the property is part of a homeowner’s association (HOA), you should also locate:
- The HOA contact’s name and phone number
While a home inspection may not be explicitly required by your lender, it’s a great way to uncover potential safety issues, ensure any additions are up to code, forecast future expenses and more. If you do opt for a home inspection, you should also locate:
- The home inspection report
Credit/Liabilities Documentation
While it’s important to highlight the features that make you a strong candidate, it’s also important to be upfront and honest about any potential concerns. Outstanding loan balances, blemishes on your credit report and more can all have an impact on your application, but they certainly aren’t dealbreakers. Just ensure they’re clarified and well-documented.
The exact documents requested will vary depending on your lender and your unique financial situation, but most homebuyers will benefit by gathering:
- Documentation of your credit card, student loan, auto loan, personal loan and other credit accounts.
While your MLO will have access to this information, you always want to double check for inconsistencies.
- Explanation letter for any dings to your credit
- Documentation disproving any incorrect information on your credit report
If you’ve gone through bankruptcy or similar, you should also locate:
- Any related paperwork
Comprehensive Homebuying Process Checklist: The Documents You Need
While your personal situation may warrant some extra documentation, like, perhaps, discharge paperwork for Veterans, this guide will provide any potential homeowner with a solid start. Simply print out a list, search through your files and check documents off one at a time.
While you’re at it, it can’t hurt to digitize these files and/or store physical copies in a fireproof box! After all, you’ll likely need most of them again if you eventually decide to refinance or sell down the line.
Published on November 28, 2022
