How to Provide Proof of Income For a Mortgage

How to Provide Proof of Income For a Mortgage

Getting the green light for a home loan starts with knowing which documents are accepted as proof of income for a mortgage. Some of these documents include your pay slips, tax returns, and bank statements.

Next, you need to understand the defining factors in your overall financial health that can either increase or decrease the probability of securing the ideal rates and payment terms for your mortgage.

As for the succeeding steps, you have to read this article until the end to uncover everything you need to know to get pre-approved for a mortgage.

Key Takeaways

  • There is no minimum income requirement for mortgage loans in the U.S. because lenders are more concerned about your capacity to repay the loan amount consistently.
  • Some valid documents you can use as proof of income for a mortgage loan are your pay stubs, Form W-2, 1099-NEC, bank statements, tax returns, invoices, and profit and loss statements.
  • Lenders assess your credit score, debt-to-income ratio, and employment history in determining whether it is best to approve or reject your loan.
  • To boost your chances of getting your loan approved, strive to get and maintain a good credit score. Research your options and find a loan within your means.

Income Requirements for a Mortgage

The truth is, there is no specific minimum income requirement for a mortgage loan in the U.S. Lenders are more focused on whether you are capable of repaying the mortgage loan consistently and without fail.

They will also probe into the following factors about your financial health:

  • Debt-to-income (DTI) ratio. Lenders measure your DTI ratio by dividing your monthly loan payments by your gross monthly earnings. Your resulting debt-to-income ratio must be a maximum of 36% or lower for conforming loans, 43% or lower for Jumbo loans and FHA loans, and at most 41% or lower for USDA and VA loans.
  • Credit score. You should have a minimum credit score of 620 if you want to qualify for a mortgage. But if you are applying for a government-sponsored home loan, you may qualify if your credit score is at least 580.
  • Employment history. Ideally, lenders prefer that borrowers have stable employment that is expected to continue for three years or more. Otherwise, you must have had a steady source of income for at least two years. Switching from one job to another at such short intervals will not leave a good impression on your financial standing.

Aside from your salary or wages, there are other sources that you can use as proof of income for a mortgage.

6 Other Sources of Income

Aside from the obvious salary or wages, the following are other valid proofs of income for a mortgage that you can submit:

  1. Alimony or child support. These are court-ordered payments that require a stable income to consistently fulfill these financial obligations.
  2. Disability payments. These are benefits offered by the Social Security Administration to persons with disabilities.
  3. Dividend income. A dividend income is any amount of cash or stock distributed to shareholders as a result of a company's or property's earnings.
  4. Investment income. It includes earnings and proceeds from real estate investments.
  5. Retirement income. It refers to any income, benefit, or lump-sum payment invested towards retirement. It can include other income sources such as annuity benefits, IRAs, and social security benefits.
  6. Unemployment benefits. It is a type of financial assistance granted by the federal and state governments to people who were displaced from their jobs.

How To Provide Proof of Income For a Mortgage

There are several different ways to prove income for a mortgage, and you can do so by preparing any of the following documents described below:

#1. Pay Stubs

Your pay stubs provide key information about your income, taxes, and voluntary contributions. Lenders get a concise idea of your finances and your capacity to balance them with your debt by simply looking at your gross and net income.

At the same time, your pay stubs provide the most solid proof that you earn money legally. In terms of determining how many pay stubs are needed for a mortgage, lenders typically ask for paychecks from the most recent 30 days.

Given that pay stubs are the most straightforward proof of income for a mortgage, it is crucial to keep copies of your payslips at all times. This is where using a paystub generator comes in handy.

A paystub generator is an online tool that lets you create multiple pay stubs in a short time. At, our generator comes with a selection of templates to suit different business needs and preferences and a built-in calculator to ensure accuracy in calculating employee salaries, taxes, and other deductions.

The best part about our paystub generator is that you can download electronic copies of your pay stubs and store them securely for future use.

#2. Bank Statements

Bank statements are documents that summarize all transactions done through your bank account. These transactions include monthly deposits, withdrawals, and monetary transfers to and from your account.

Credit card payments and bills are also reflected on your bank statement. If your employer sends your salary through direct deposit, then your bank statements help attest that you have a consistent stream of income.

#3. Credit Reports

Credit reports are a type of proof of income for a mortgage that lenders usually acquire with the borrower’s written or verbal permission. However, requiring credit reports also depends on the type of mortgage loan you are applying for.

Your credit report details your credit score and history. Some mortgage loans, such as conventional loans and jumbo loans, entail higher credit scores of at least 620 to the mid-700s, while government-backed loans, such as FHA, require a minimum credit score of 500.

#4. Tax Returns

If pay stubs report the amount regularly paid to you by your employer, your tax returns summarize all types of income you earned or received in a tax year. For mortgage loans, you will usually need to present at most two years’ worth of your returns.

It is more comprehensive documentation of your financial standing that also offers proof of your diligence as a taxpayer.

To acquire copies of your tax returns, you may be asked to complete IRS Form 4506-T. The form grants lenders permission to request that the IRS send them copies of your tax returns.

#5. W-2 Form

Your W-2 form outlines all federal and state taxes withheld from your regular earnings. Requesting a copy of a borrower’s Form W-2 as proof of income for a mortgage is more common for debtors who earn money through their regular employment.

You can obtain a copy of your Form W-2 for the current year from your employer. You can also use a W-2 form generator if pressed for time.

How to Provide Proof of Income as a Self-Employed Individual

Presenting proof of income for a mortgage when self-employed is possible, and all you have to do is take note of the following valid documents that you can use:

  1. Profit and Loss Statements. These are records of your business or work’s revenue, expenses, and earned profit within a specific timeframe. Profit and loss statements accurately assess your financial management skills, a key determinant of your trustworthiness as a debtor.
  2. Form 1099-NEC. This IRS form is used to report self-employment compensation. Freelancers and independent contractors paid at least $600 or more for their services use the 1099-NEC to report income on their taxes.
  3. Annual Tax Declaration. For business owners, your annual tax declaration provides lenders with the necessary information about your tax liabilities. Make sure to report all your taxable income and pay your taxes on time to avoid an IRS audit and increase your chances of getting approved for a mortgage.
  4. Self-employed pay stubs. Regular employees are not the only ones who can benefit from a pay stub generator. Even self-employed individuals and freelancers will find the said online tool quite convenient, especially when securing loans or financial assistance. Paystub generators enable you to document all payments received from your clients and projects and prepare the correct number of pay stubs for a mortgage.
  5. Invoices. Aside from your self-employed pay stubs and profit and loss statements, you can also use invoices sent to your clients, particularly when you earn money mainly through selling goods.
  6. Collaterals. Collaterals are valuable properties or assets offered to lenders as a security measure or guarantee for the loan. In a mortgage, the collateral is the real property or home you want to purchase.

5 Best Practices for Organizing and Providing Proof of Income Documents

Preparation is key to increasing your approval rates for a mortgage.

That said, here are five best practices to help you stay organized and well-prepared as you gather the paperwork needed to prove your income for a mortgage loan:

  1. Review your credit. Before preparing all the paperwork for your mortgage application, you must first ensure that you have a good credit record to start with. A good credit record means you do not have outstanding or unpaid debts or missed repayment deadlines and have duly maintained credit accounts. You must also have a good credit score to secure a higher mortgage and lower interest rates.
  2. Do your research. Dedicate time and effort to discovering different home loan options that apply to your finances and desired property. Set up meetings with different brokers and compare their rates and offers.
  3. Set a realistic loan amount. Keep your loans reasonable and aligned with your financial situation. A crucial mistake that debtors make when trying to secure loans involves aiming for a loan amount that exceeds their gross and net pay. Not only will you decrease your chances of securing your loan, but you may also end up with a mountain of debt if you are unable to keep up with the monthly payments and interest.
  4. Gather all necessary and applicable documents. Whether you are a freelancer, a business owner, or a regular employee, make it a point to secure all the essential documents and proof of income for a mortgage that apply to your employment status and source of income.
  5. Check for possible penalties. Verify whether your mortgage comes with prepayment penalties.Not all mortgage loans allow debtors to pay twice the amount of their monthly dues for the purpose of reaching the end of the payment terms a lot sooner.
  6. Gather all necessary and applicable documents. Whether you are a freelancer, a business owner, or a regular employee, make it a point to secure all the essential documents and proof of income for a mortgage that apply to your employment status and source of income.
  7. Check for possible penalties. Verify whether your mortgage comes with prepayment penalties.Not all mortgage loans allow debtors to pay twice the amount of their monthly dues for the purpose of reaching the end of the payment terms a lot sooner.

Final Thoughts

Securing all the proof of income for a mortgage that you need is one of the best ways to boost your approval rate for your preferred home loan.

Some lenders might ask you to complete additional steps in your application process or submit supporting documents to verify your finances.

When in doubt, you can always use this article as your trusted guide to ensure you have all the important documents organized and best practices checked to purchase your dream home.

Proof of Income For a Mortgage FAQ

#1. Can you apply for a mortgage without proof of income?

Yes, you can apply for a mortgage without proof of income.

Applying for a mortgage without the usual documents to prove your income source is called a no-income verification mortgage, and it is an available option for debtors with a non-traditional livelihood or method of generating revenue.

#2. Can I apply for a mortgage with a low income?

Yes, you can still apply for a mortgage even with a low income. Lenders are more concerned about whether you can repay the loan amount monthly.

Your approval will also depend on the amount you plan to borrow, the interest rate, and other key factors that define and affect your credit score and overall financial standing.

#3. What do you need to apply for a mortgage?

To apply for a mortgage, you must prepare copies of your Form W-2 for the last two years, your most recent pay stubs, bank statements, signed tax returns, a minimum down payment worth 3% of the loan amount, and a credit score of at least 620.


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