What Documents Does Your Borrower Need?

This article will provide a list of documents that are typically required in order to formally submit a mortgage application for underwriting review. The documents outlined below are meant to be a guideline for you and your borrower as you prepare to submit a mortgage application. 

Having these documents available ahead of time can save much of the back-and-forth experienced during the loan process, build rapport with your clients, and cut down on the time it takes to close – potentially saving your client time and money!

Document Checklist

Once your customer is getting ready to apply for a mortgage, go ahead and send them the checklist found on Morty’s public site.

DOCUMENT CHECKLIST

Document Requirements

See all document requirements below with specifics on when they are required and what info needs to be included on all documentation.

Signed purchase contract

Must be signed by buyers and sellers and must include all addenda and counter-offer(s).

Credit report

Credit is typically pulled at the time of application.

Proof of Assets

Generally, 2 months of full bank statements are required for every account used for assets.

Bank statements are not needed at submission when the entirety of closing costs are covered by either sale proceeds or gift funds.

All “large deposits” (any deposit into your bank account larger than half a month’s income) must be explained and sourced for the funds to be used at closing

If your borrower is using:	Needed at submission	Needed prior to closing
Bank/Brokerage accounts	Either: Two most recent monthly statements or Most recent quarterly statement
Sale proceeds	Prelim CD for sale (if available)	Signed CD for sale
Gift funds	N/A	Signed gift letter, proof of gift funds transferred from donor (copy of check or bank statement), & proof of gift funds received (borrowers/recipient bank statement)

Income

Income requirements change based on the type of income your borrower receives.

If your borrower has:	Needed at submission:	Needed prior to closing:	Notes:
W-2 (FT/PT/Salaried) income	W-2s from last 2 years Most recent pay stub	Final pay stub from prior year (to confirm variable income such as bonus/commission)	Variable pay (bonus, commission, overtime) will be averaged over the last 2 years
Self-employment income (including 1099)	2 most recent years filed tax returns (personal and business if applicable) including all schedules K-1s (if applicable)	Proof business is open and operating within 10 days Profit and Loss statement may be required depending on time of the year	Self employment income will be averaged over 2 yearsIncome declining Year over year will result in a more conservative calculation
Current rental income	Most recent filed personal tax returns Signed lease agreement (if not appearing on schedule E)		Net rental income after expenses
Future rental income	Signed lease agreement	Proof of 1st months rent and security deposit received	Qualifying income will be 75% of the signed lease agreement rent
Future employment earnings	Signed and fully executed offer letter, with all contingencies met with anticipated start date, role, and pay structure		Sign on bonus cannot be used as qualifying income
Retirement income (Soc security, Pension awards, Permanent disability)	ONE of the following: Social security or pension awards letter (current year)Most recent 1099-R Recent (sole) bank statement showing depositMost recent awards paystub		Deposits made to bank accounts are grossed up 75% if income is non-taxable

Liabilities

There are some cases where borrowers may need to provide more documentation for their liabilities.

If the borrower has:	Needed at submission:	Needed prior to close:	Notes:
Other Real Estate owned (retained)	Most recent mortgage statement If Property taxes and HOI are NOT escrowed, copies of property tax bill and HOI declarations are requiredHOA dues (if applicable)	Confirm mortgage on existing property is paid current	Advise the intended occupancy of the departing residence (second home or investment conversion)
Other Real estate owned (pending sale)	N/A	CD for sale	If sale occurs prior to or simultaneously with subject property closing, mortgage liability isn’t included in DTI. If a borrower is selling after closing, both PITIAs must be supported by the borrower’s income
Student loan income-driven repayment plan (IDR)	Copy of the IDR paperwork, all pages		If the borrower doesn’t have an IDR and payments are currently deferred, the lender will use 1% or .5% of outstanding student loan balance