How to Get a Loan With Pay Stubs: Full Guide
December 12, 2023
The key to securing your desired loan with pay stubs is having the required number of pay slips along with all the supporting documents that could help certify your income, finances, and identity.
While loan requirements differ depending on the type of loan you are applying for, your pay stubs serve as the most consistently sought-out proof of your income and reliability as a debtor.
Keep reading if you want to learn how to get a loan with just pay stubs and discover additional requirements that lenders usually seek when evaluating different loan applications.
- To secure a loan with pay stubs, make sure you have copies of your pay slips from the last 30 days to the last six months.
- Lenders typically assess a debtor’s income, debt-to-income ratio, and credit score. Some loans require collateral and an origination fee.
- Pay stubs, bank statements, proof of identification, and tax returns are the most common documents that lenders use to evaluate a debtor’s qualification for a loan.
Requirements For a Loan
The different requirements for a loan are meant to give lenders an idea of your financial status as a borrower.
They typically require the following:
- Income. One of the first things that lenders look at is your income to verify whether you earn enough to afford the money you want to borrow.
- Debt-to-income ratio. Your debt-to-income ratio refers to your monthly loan payments divided by your gross monthly earnings. A good debt-to-income ratio should be 43% or lower. Lenders use your debt-to-income ratio to further assess your financial stability and readiness to consistently meet your repayment deadlines.
- Credit score. Your credit score is a type of rating that ranges from 300 to 850, and it is used to predict your overall credit behavior. The different factors that affect your credit score include any existing and unpaid debt, your history of bill payments, the number of credit and bank accounts you currently have, and the amount you have available to use.
- Collateral. Collateral refers to any valuable property or asset that you declare to guarantee your loan. Loans with check stubs are not always enough or common, and this is often the case in secured loans and mortgages. Secured loans and mortgages require collateral; if the debtor is unable to repay the loan amount, then the lender seizes full ownership of the property.
- Origination fee. Some (not all) lenders require debtors to pay origination fees amounting to 1% to 8% of the total loan amount. Origination fees are used to cover the expenses associated with reviewing the debtor’s credit history and processing their loan application.
Types of Documents Needed to Apply For a Loan
Aside from the requirements enumerated above, the following types of documents are also essential in processing loan applications:
#1. Pay Stubs
Pay stubs report your gross and net monthly income. It is the most direct evidence of your financial security; hence, securing a loan with pay stubs is common for most types of loans.
Aside from your income, pay stubs also declare other key information regarding your source of income and trustworthiness as a debtor.
Examples of these key details are your federal, state, and local income taxes. Consistently paying your taxes is a good indicator for lenders because it indicates responsibility and adherence to federal and local regulations.
If you have contributions to health and life insurance premiums, then this will also factor into assessing the stability of your income when it comes to affording debts.
In truth, some lenders only ask for additional documents if they find that the information declared in your pay stubs is lacking in any way.
Given the valuable information that paychecks hold in helping you secure your desired loan, it would be helpful to use online tools that enable you to generate complete copies of your pay stubs to stay prepared.
A pay stub generator is an online tool used to create and produce multiple pay stubs seamlessly. Paystub.org offers an online generator with templates outlining all the important fields and details in a pay slip, a built-in calculator to calculate taxes and voluntary deductions, and an option to download your pay stubs in PDF format for your convenience and security.
#2. Bank Statements
Bank statements record all transactions carried out in your bank or credit account. These transactions include all the money deposited and withdrawn from your account.
If you paid utilities and other services through bank transfer or online bill payment, had service charges debited from your account, or if your employer sent your salary through direct deposit, then the said transactions are also reported in your monthly bank statement.
Bank statements can either be printed or sent electronically to your email. Aside from your bank account’s transactions, your account details and starting and ending balances are also declared in your bank statements.
Identification, or proof of identification, includes any of the following:
- Birth certificate
- Certificate of citizenship
- Valid driver’s license
- U.S. passport
- State-issued ID
Applying for a loan with pay stubs may not always suffice, especially when lenders need to verify your identity and certify that you legally meet all the other loan requirements.
#4. Tax Returns
As long as you are a U.S. citizen or a permanent resident who works and earns income in the United States, then you automatically have to present copies of your tax returns.
Your tax returns outline all types of income you’ve earned and received within the tax year. It is a more comprehensive summary of all your income sources and a good indicator of your consistency in fulfilling your tax responsibilities.
If you are applying for a loan with pay stubs, submitting copies of your latest income tax returns effectively boosts your qualifications for your desired loan.
How to Obtain Pay Stubs For Your Loan Application
Securing a loan with pay stubs can be tricky, depending on whether you are a regular employee, a freelancer, or if you have additional income from owning a small business.
Here are different ways you can obtain copies of your pay stubs:
As a freelancer, you have full control over your income and finances, given that you are also the one setting the rates for your services. This also means shouldering additional responsibility when it comes to monitoring all payments from your freelancing gigs.
That said, if you are wondering how to get a loan with just pay stubs as an independent contractor, you can use online tools in the form of a pay stub generator. A pay stub generator makes it easier and faster to track all of your earnings as an independent contractor.
It takes less than a minute to create a pay stub using the generator. You can also minimize errors in inputting all your income and tax information with the help of ready-made templates and a built-in calculator.
Consequently, you can rest assured that you have complete documents to certify your income source, an advantage that comes in handy when you apply for a loan with pay stubs.
Small Business Owner
Similarly to freelancers, small business owners also have the responsibility of tracking all their expenses and earnings. Keeping records of your earnings and the salary and wages paid to your employees comes in handy when applying for loans.
Hire accounting and payroll personnel to help manage and monitor your business’s earnings, essential expenses, and payments to your employees.
If you have extra money to spend from your budget, you can also use payroll software and pair it with a pay stub generator to prepare employee pay stubs and help regulate their taxes owed in a timely manner.
Most regular employees’ pay stubs are managed by their employers. However, it may not always be the case in states where the pay stub requirements are not that strict. Regardless, you must always see to it that you keep track of all salaries or wages paid to you by your employer.
Whether you receive a printed or electronic copy of your pay stubs, it is your responsibility to secure them in safe storage for future use.
On the other hand, if you are based in a state with no specific regulations on issuing pay stubs, it is best to inform your employer that you prefer to receive a breakdown of your earnings every payday.
If you are still wondering, can I get a loan with just pay stubs? The answer is a resounding yes!
Securing a mortgage, personal loan, or car loan with pay stubs is easy if you dutifully keep copies of your paycheck records and have all other supporting financial documents ready before submitting your application.
Remember, it is important for lenders to weigh your assets, liabilities, and income to determine your capacity and commitment to fulfill the financial obligations coupled with your desired loan.
Loan With Pay Stubs FAQ
#1. Can I apply for a loan without pay stubs?
Yes, you can apply for a loan without pay stubs. This loan is called a no-income loan, wherein you can get approved either with the help of a cosigner or by pledging collateral in place of submitting proof of income.
An impressive credit score also boosts your qualification for a no-income loan.
#2. Why do lenders need proof of income?
Lenders need proof of income to assess your capability to repay the loan amount. Hence, they typically compare your gross earnings with the amount you wish to borrow. Lenders also want to verify that you earn money legally.
#3. Can you get a loan without income verification?
Yes, you can get a loan without income verification if you are applying for a car title loan or secured loans that require collateral instead of income verification. You can also secure a loan without verifying your earnings by pawning some of your valuable items.
#4. Can I make my own pay stubs for a loan application?
You can make your own pay stubs for a loan application by using a pay stub generator. Applying for a loan with pay stubs is quite common, and preparing copies of your paychecks comes in handy if you are self-employed or if, for some reason, your employer cannot provide your pay stubs.
#5. How many pay stubs do I need for a loan?
The number of pay stubs you need for a loan will depend on the type of loan you are applying for. For instance, to secure a car loan with pay stubs, you’ll need at least two months’ worth of your paychecks, while a mortgage requires at least 30 days to at most three months worth of two pay stubs to get pre-approved.