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In order to get preapproved for a mortgage, your mortgage lender will need to verify your income and asset information to determine how much home you can afford and the interest rate you’ll pay on the loan.

While it might seem a bit taxing to provide all this documentation, it benefits you in the end, as you won’t end up with a monthly mortgage payment that you can’t afford.

But before we get too deep in the weeds, let’s discuss what a verification of your income and assets entails and what documents you’ll need to ensure a smooth home buying process.

What Is a Verification of Income?

When a mortgage lender requests a verification of your income, they’re checking to see if you have the means to make your mortgage payments each month.

You wouldn’t borrow more than you have the means to pay back, and your monthly mortgage payments are no exception. That’s why your mortgage lender will request this information – it’s a way of making sure you’re able to finance your mortgage payments.

Mortgage Verification Requirements

In order to confirm your income, a mortgage lender will request a few documents. A good way to remember the documentation you’ll need is to remember the 2-2-2 rule:

  • Two years of W-2s
  • Two years of tax returns (federal and income)
  • Two most recent pay stubs

Additionally, you should have records at the ready of your most recent checking account statements, current savings account statements, monthly debt obligations and statements from any other loans you may have (personal, student, auto, etc.) and your most recent credit card statements.

How Does Your Lender Verify Your Income for a Mortgage?

Your mortgage lender might also contact your employer directly to confirm your employment. This allows the lender to verify that the information on your W-2s and paystubs is recent and accurately reflects your income amount.

If you’re self-employed, you can still get a home loan. You’ll just need to show proof of a steady income. You can provide this information with your quarterly or year-to-date profit/loss statement and at least two years’ worth of your federal/ income tax returns, both business and personal.

Of course, the forms of income verifications and document requirements could vary based on your personal financial situation, so it’s best to confirm what you’ll need with your mortgage lender.

What Is Verification of Assets?

Just like mortgage lenders will want to verify that you have the means to make your monthly mortgage payments, they’ll also want to ensure that you’ll be able to pay the principal, interest, taxes and insurance in case of a financial emergency.

This is determined by your assets, or items you own that have value, like savings accounts, checking accounts, stocks, etc. When these assets have a cash value, or are easily converted into cash, they’re known as “liquid assets.”

Lenders want to confirm that enough of your assets are liquid in case of a financial emergency that leaves you unable to keep up with your mortgage payments. When life throws you curveballs that cost you access to your income (loss of a job, medical emergency, etc.) your liquid assets are there to help you pay your bills.

What Is an Asset Document?

Examples of documents you might have to submit to verify your liquid assets include:

  • Checking accounts
  • Saving accounts
  • Certificates of Deposit (CDs)
  • Stocks
  • Mutual funds
  • Bonds
  • IRA/ 401(k) or other retirement plans

Cash is also considered a liquid asset, however, it needs to be “seasoned.” This means that the cash has been in your checking or savings account for a considerable time (at least two months, in this case) to prove that you’re a responsible saver, and showing your lender that you’re able to finance your mortgage.

Most lenders suggest to have six months’ worth of liquid assets in order to plan for an unforeseen financial issue. This ensures that you have a way to continue your mortgage payments, should something happen to your main source of income.

You can also submit proof of non-liquid assets, or assets that are harder to convert to cash like property, cars, self-owned businesses and any other item of material value like artwork or jewelry. However, these assets might be harder to liquidate in an emergency, as they may take time to convert into cash.

It may seem like you’re drowning in a sea of documents and paperwork, but there are a few ways you can avoid all the potential paper cuts.
If you’re thinking about getting a conventional loan through Fannie Mae, you’re now able to verify your income, assets and employment with just the direct deposit information on your bank statement.

Another way is to get started with Rocket Mortgage® by Quicken Loans, where you’re able to submit your documents completely online – no paper cuts necessary! Or, if you’d rather get in touch with one of our Home Loan Experts over the phone, you can call (800) 785-4788.

Do you have any questions about the income and asset verification process? Let us know in the comments below.

This Post Has 14 Comments

  1. I was preapproved for a fha loan, I had 14 months of employment from 5/2018-6/2019 had a gap of employment from 6/2019 to 6/2020 when I was hired at my new employer still working have 9 months in as of now, is this enough employment for the underwriter? Or will this be a problem? I’m pretty close to closing on the property but keep getting asked questions about employment verification and such! Before 2018 I received ssdi would that count as additional verification for income/employment I no longer receive it because I am now working a full time job. My lapse of employment for the year was due to 2 semesters of college and covid.

    1. Hi Jay:

      I’ll start by saying that I can only speak to our policies, and not those of other lenders. However, based on the information you’ve given me here, I recommend you speak with one of our Home Loan Experts at (888) 980-6716. What I can tell you for sure is that while SSDI would have counted as income while you were on it, it doesn’t count as work history because it’s not a job. Thanks for reaching out!

    1. Hi Ray:

      I’m not 100% sure what type of loan you’re referring to. This page features many of the types of mortgages we offer. I recommend speaking with one of our Home Loan Experts at (888) 980-6716 to go over your options. Thanks!

  2. Spouse has a job transfer out of state (same company) and we’re looking to purchase a new home worth about the same as current home, but I do not yet have a new job lined up out of state. Income will be cut in half but we will be making significant money from the net proceeds from the sale of our existing home. Can this be used as proof of income along with any reserves we have? Or can my current proof of income be used since I’m still employed even though it will stop upon moving?

    1. Hi Heidi:

      The income from the sale can be used as reserves because those are assets. However, it can’t be used as income because income implies it keeps coming in. Also, you can’t use the proceeds from your current job’s income because we have to be able to show that the income is likely to continue. Therefore, only your spouse’s income could be used. I recommend you speak with one of our Home Loan Experts at (888) 980-6716.

    1. Hi Robert:

      I’m going to get this over to our team to make sure we can get you taken care of from an approval letter standpoint. However, I can tell you that it’s a PDF, so using Adobe reader or some similar PDF program may be the best way to access and print it. Have a great day!

  3. I am a SSDI beneficiary whose benefits are managed by a payee. Can I claim that as a source of income even though their name is listed as payee on my statements? If so, how would I go about validating this source of benefits?

    1. Hi Dede:

      You have your award letter and tax records and we would work with you to verify that your SSDI is going directly to your representative payee. I recommend speaking with one of our Home Loan Experts to go over your situation at (888) 980-6716.

  4. If I have already been preapproved and recieved my preapproval letter, will I need any further documentation prior to purchasing a home? IE: bank statements, paystubs, etc. I have already provided all my information and was approved based on that, but want to make sure I have everything prepared to finish this process smoothly.

    1. Hi Joey:

      There are cases in which mortgage lenders end up asking for that stuff again. My best advice in order to make sure everything goes smoothly is to save or have easy access to things like bank statements and pay stubs until your mortgage closes. Thanks for reaching out!

    1. Hi Sarah:

      That varies depending on the cost of the house the types of loan options you qualify for. Depending on the program, you can get into a primary home with anywhere between 3%–5% down. The mortgage lender will also require you to have at least a couple of months’ worth of reserves. This means that if you lost your job or for any other reason had a disruption in your income, you would be able to make your full mortgage payment including principal, interest taxes, insurance and homeowners association dues (if applicable) for at least a couple of months. If you want, you can check out our first-time home buyers guide. If you think you’re ready to purchase, you can get started online through Rocket Mortgage or give one of our Home Loan Experts a call at (888) 980-6716. Hope this helps!

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