Home Application Checklist – Documents and Definitions
Asset/bank statements: Statements from personal and/or business checking, savings, brokerage, retirement, and money market accounts that are requested in order to verify assets, income, or the sources of large deposits, excluding paychecks. Typically, borrowers are asked to send statements from the previous two or three months.
Bankruptcy discharge papers: Legal proof of the discharge of any bankruptcies in a borrower’s credit history. Bankruptcy documentation also may be requested to verify that the mandated waiting period has been satisfied.
Credit explanation letter: A written letter of explanation, statements, and verification to document or describe a variety of special credit situations. Examples include explaining derogatory credit or other financial hardship, including bankruptcy.
Federal tax returns (1040s): May be requested, along with accompanying schedules, to verify income derived from a variety of sources, including:
Government-issued photo ID: Includes a driver’s license or passport. Often requested in conjunction with a Social Security card.
Homeowners insurance: Real estate insurance policy to protect against loss caused by fire, vandalism, some natural disasters, personal injury, and theft.
IRS Form 4506-T (PDF*): Request for Tax Transcript form; required on all applications. Gives permission to verify the income reported to the IRS, and is usually requested for the previous one or two years.
Judicial decree or court order: Verification of a legal ruling that impacts a borrower’s assets or debt obligation. Examples might include proving that an obligation to make certain debt payments has been assigned to another person, or validating the transfer of property ownership.
List of all business debts: Accounting of business-associated debts for which a borrower is personally responsible.
Pay stubs: Documentation of compensation from employer, either monthly or bi-weekly. Online pay stubs must be signed by a company representative.
Payment history: Documents verifying that a borrower without a traditional credit history can manage credit and repay creditors as agreed. Examples of suitable documents include evidence of regular payments for public utilities, phone, cable TV, and car insurance.
Profit and loss (P&L) statement: A summary of the revenues, costs, and expenses incurred during a specific period of time. Such a statement demonstrates the ability of a company to generate profit by increasing revenue and reducing costs.
Purchase contract: A signed agreement between the buyer and seller describing all the terms of a real estate purchase transaction. Also known as a sales contract.
Source of funds: Written documentation to state the origins of any large deposits on asset statements, excluding paycheck deposits.
W-2s: Wage and Tax Statement. A borrower may be asked to provide a W-2 from the most recent year or two years to verify monthly income.
Written explanation: A letter of explanation explaining an employment gap or, if employed less than two years, employment history.