Article Documentation That The First Time Buyer Will Need

Documentation That The First Time Home Buyer Will Need To Produce During the Loan Process

- 1 month of paystubs – We need to see the year-to-date gross pay in order to be able to calculate the debt-to-income ratio, sometimes called the debt ratio. This calculation determines the maximum amount that the lender will lend.

- 2 years of W2s and/or 1099s – The income from previous years is also sometimes used to calculate debt ratio. The W2s and 1099s are also part of the process to verify 2 years of employment in a certain field. If a person had not owned a home, he or she most likely would not have filed a Schedule A with the tax return. All first time home buyer assistance programs in San Diego will require complete income documentation.

- 2 or 3 years of tax returns with all pages and schedules – All first-time homebuyer financial assistance programs require 3 years of tax returns to verify 1^st time homebuyer status. These returns must show no deductions for mortgage interest or property taxes on the Schedule A for the last 3 years. First time home buyers trying to qualify for first time home buyer assistance programs will always be required to provide tax returns.

- 2 months of bank statements – Many loan programs require several months of mortgage payments to have been sitting in a bank account for at least 2 months prior to the close of escrow. All first time home buyer assistance programs in San Diego County will require previous tax returns.

- 2 months of statements from any investment accounts listed on the loan application. The more assets that the borrower can bring to the table, the better. First time home buyer assistance programs in San Diego will usually require some amount of assets (e.g. money in the bank) in reserve.

- 1 or 2 years of bank statements if the borrower is a self-employed entrepreneur – Many loan programs will allow a self-employed entrepreneur to use a percentage cash deposits in the business bank account to demonstrate income, even if the tax returns do not show sufficient income on the Schedule C.

- Business license if self-employed – If a self-employed person is not required to obtain a business license, the lender may request a letter from the borrower’s accountant or licensed tax preparer stating that the borrower has been employed in his or her respective field for at least two years.

- Divorce decree with all pages, especially anything related to spousal or child support, if applicable.

- Leases – If the borrower states on the loan application that he or she owns rental properties, the lender may request that the existing leases be provided in order to verify the income from the rental properties. If the loan was stated income, the lease payments would be blackened out.

- Bankruptcy documentation if applicable

- Copy of the credit report – The borrower should pull his or her own credit report prior to the loan process beginning.

- Letters from any creditors that are paid off but still showing up as unpaid on the credit report.

- Copy of driver’s license and social security card.

- Copy of Green card (Form I-551 or an I-551 stamp on a visa)

- Gift letter – The loan officer will provide this to get signed if a parent is donating a gift toward down payment or closing costs. I can provide a standard gift letter to first time home buyers who are receiving gifts to be used as down payment assistance or closing cost assistance.