Getting pre approved for a mortgage has many benefits for the homebuyer. You’ll have a better idea of how much house you can afford, so you can make smart financial decisions. Plus, having a pre approval letter will show the seller you’re serious.

In this guide, we’ll cover all the documents needed for mortgage pre approval, so you’re ready to go.

Pre Approved vs Pre Qualified for a Mortgage: What’s the Difference?

Before we get into the items needed for mortgage pre approval, let’s clarify two terms that are often confused: pre approved vs pre qualified mortgage. While some lenders use the words interchangeably, in most cases, they are two separate processes.

Mortgage Pre Qualification

A mortgage pre qualification is a discussion between you and a mortgage professional about your assets, income, and expenses. Based on their knowledge and experience, they’ll give you a general idea of whether you’ll be approved for a mortgage and the range you can expect. Typically, there are no documents needed for mortgage pre qualification. You’ll provide self-reported information instead.

Home Loan Pre Approval

On the other hand, getting pre approved for a mortgage loan is a more formal process where the lender checks your credit report, employment history, and income. They’ll use this information to determine the maximum amount you can borrow, interest rates, and other terms. This results in a pre approval letter you can share with sellers.

What Documents Do You Need for a Mortgage Pre Approval?

Let’s talk more specifically about your most pressing question: What documents do I need for mortgage pre approval? They generally fall into a few categories:

  • Proof of income and assets
  • List of debts
  • Tax documents
  • Credit history
  • Contact information

Most lenders will have a list of items needed for mortgage pre approval that’s similar to this:

W-2 Forms from Your Current Employer

Unless you’re self-employed, lenders will ask for W-2 forms for the past two years to establish your income and employment history.

Pay Stubs

Lenders usually also ask for pay stubs for the last 30 days to get a broader picture of your income. How often are you paid? What comes out of your check? Do you receive commissions?

Tax Returns

Your tax returns are another way lenders assess your income. Do you have other sources of income? Are you self-employed? Sometimes, tax returns are required to be eligible for certain government loan programs.

Year-to-Date Profit and Loss Statement

If you’re a freelancer, independent contractor, or self-employed, you’ll need to provide your year-to-date profit and loss statement in addition to your standard tax forms for the last two years.

Monthly Debts

Lenders will ask for all debts that you’re currently paying on a monthly basis such as student loans, car payments, or credit card bills. They’ll want to know the total debt and minimum monthly payment.

Current Mortgage Debt

If you already have a mortgage, you’ll need to share your most recent mortgage statement. This should include the loan number, monthly payment, loan balance, and the lender’s name and address.

Bank Statement and List of Assets

Most lenders request the last 60 days of statements for every type of banking account. This could include checking or savings accounts, CDs, retirement plans, or investments.

Retirement and Security Accounts

Even if you don’t intend to tap into these accounts to pay your mortgage, lenders want to know all the financial resources you have. Be sure to collect the last 60 days of statements for retirement savings, stocks, bonds, mutual funds, etc.

Renter’s Records

If you’re currently renting, you’ll need to provide documentation of regular rent payments and your landlord’s contact information.

Bankruptcy Documents

Lenders may require proof that you have no outstanding debt if you’ve filed for bankruptcy in the past.

Divorce and Child Support

If applicable, you’ll need a copy of your divorce decree and any court orders for child support or alimony/spousal support, whether you’re paying or receiving them.

Down Payment Gift Letters

While not always required at the pre approval stage, if you’ll be relying on financial gifts to fund your down payment, obtain letters from your donors showing they don’t expect to be paid back.

What’s the Best Way to Get Pre Approved for a Mortgage?

In addition to gathering the information above, the best way to get pre approved for a mortgage is to read and understand your credit report. Make sure you maintain a strong credit score by removing any inaccurate information, paying on time, and not opening any new lines of credit when you’re about to apply for a mortgage.

Get Pre Approved for a Mortgage Loan!

Now that you know the documents needed for mortgage pre approval, it’s just a matter of organizing everything.

Getting pre approved for a mortgage loan does require a bit of work. However, it’s well worth the effort. You’ll know exactly where you stand when you start looking at potential homes. Plus, your lender will request the same documents when it’s time to finalize your mortgage application, so you can move forward quickly when you find your dream home.