New Construction Loan 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.
Federal tax returns (1040s): May be requested, along with accompanying schedules, to verify income derived from a variety of sources, including:

  • Self-employed income, contract income
  • Employee business expenses, including automobile allowance
  • Rental income
  • Pensions, Social Security or retirement income
  • Royalty payments, interest or dividend income
  • Seasonal income/ unemployment compensation
  • Capital gains, notes receivable
  • If employed by a relative, family business, or someone involved in the transaction
Gift letter (gift statement): Written verification that gift funds are coming from an appropriate source and in an appropriate manner. For example, it helps to ascertain that the gift is not an inducement to purchase a certain property. Appropriate sources are typically relatives, fiancé/fiancée, or a domestic partner. A gift from any other source is considered an inducement to purchase and may require a reduction in the sales price. A gift letter should include:

  • Donor’s name, mailing address, and phone number
  • Amount of gift
  • Name of recipient (must be the borrower)
  • Donor’s relationship to the borrower
  • Subject property address
  • Location of funds, either in borrower or donor’s account; depository name, address, and account number
  • Donor’s and borrower’s signatures
HUD 1 settlement statement: A form used at closing that gives an account of the funds received and paid at the closing. Can be requested to verify the receipt of proceeds from sale of the buyer’s current home, as well as in some refinance situations.
Pay stubs: Documentation of compensation from employer, either monthly or bi-weekly. Online pay stubs must be signed by a company representative.
Profit and Loss (P&L) statement: 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.
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.