What will a lender accept as proof of Income? - Many borrowers today earn income in many different ways. When applying for a mortgage they have a hard time proving their income in traditional ways with pay stub and W2s. Lenders have recognized this problem. They are offering different ways for borrowers to prove income.
Some lenders will allow you to state a certain percentage of the income you can document.
There are also programs known as "No Doc" programs which do not even require any income documentation. Check with your mortgage professional to see which program is right for you.
Some lenders who don't require any income documents will still ask for reserves. Its important to know if your qualifying for a stated loan no assets vs a stated loan verified assets. Check with your mortgage professional or contact me. I can be reached at 415-617-5448 or you can email me [email protected].
There is nothing more solid than W-2s. Verifications of Employment (VOE's) usually take more time, and unearth more problems if not filled out entirely correct. Nothing is more solid than the word of the IRS. W-2's.
There are programs through certain lenders that will allow you to state your income while getting the lower full doc rates. However you will need at least 10% equity in the property for a refinance or a 10% down payment for a purchase. These loans are often referred to as "fast and Easy" loans with the lenders that provide them.
If you use a stated income loan you will not need to provide proof of income.
Some lenders will accept copies your bank statements as proof of your income. Policies vary from one lender to the next, with some accepting 100% of your deposits as income, and others only accepting a percentage.
Many banks do not require any documents as proof of income from home buyers with excellent credit profiles and high credit scores. This type of loan borrowers only need to disclose their incomes on the Uniform Residential Loan Application, with no supporting W2's, paycheck stubs, or tax returns. Depending on the particular lender, some banks also require the home buyers to sign an IRS form 4506T, with which the banks can request a copy the homeowner's tax returns from the Internal Revenue Services.
If you plan on using child support or alimony as income for loan qualification be sure to have any divorce decrees or other pertinent documentation to prove the income is stable and will continue.
Tax returns can be used in certain instances to prove income. The documents that the lender is looking for are things that give them a concrete acknowledgement that what was specified in the application is true.