It’s never “good enough” for me to know WHAT I need to provide to someone, I need to know WHY I’m providing it. Everyone’s situation is different, so the documentation may look different for every borrower. Let’s break it down to three categories. Income, Assets and Credit. These are the areas that all underwriting guidelines are focused on proving.
Income – You must be able to prove you are working and how you are getting paid. The underwriter must show you have at least a two year history of receiving the income and the likelihood it will continue for the next three years.
W-2 employee – Most recent 4 weeks of pay stubs + last 2 years of w-2’s – by far the easiest category.
Commission employee – Most recent 4 weeks of pay stubs + last 2 years of Federal Tax Returns with all schedules (IRS form 1040). You must show whether or not you are claiming un-reimbursed expenses which must be deducted from your income.
Self Employed – Last 2 years of Federal Tax returns with all schedules
Retirement or Disability Income – Last 2 years of 1099’s, Most recent Award Letter, Last two months of Bank Statements if direct deposited, If disability you must show proof that the income is likely to continue for at least 3 years.
Rental Income – Last 2 years of Federal tax returns – Only need first two pages plus the schedule E. Sometimes a lease will suffice if you purchasing a single family investment property or and FHA two, three or four family.
Dividend or IRA income – Last 2 years of Federal tax returns to show you have been receiving the income + the most recent account statement to show you have enough for the income to continue for at least three years.
There are many more types of income, pages in fact, but the above are the most common. Now lets look at assets. The underwriter must be able to see the required amount of assets in the account for the past 60 days. That means that EVERY DEPOSIT MUST be sourced and seasoned. You cannot deposit cash and be able to use it for a purchase for at least 60 days. Here is what the underwriter will require.
Last two months of bank statements – ALL PAGES – yes, even that annoying last page that tells you how to balance your checkbook must be included. Do NOT just send the first page with the balances.
Most recent 1 month or quarter of other Asset account statements like 401K, Money Market Account, Stock Portfolio account, and so on. You get the picture.
Gifts must be very meticulously documented. Gift letter from the giver stating who they are, the relationship to borrower, that the funds will not need to be paid back, and all their contact information. Then you need to provide proof the gift giver had the ability to give. Usually a withdrawal slip from the bank showing the account balance at the time of withdrawal is sufficient. A copy of the check and printout signed by your bank showing the transaction where you deposited the funds into your account. If you think “paper trail” you will do it correctly.
Credit – Almost everything else falls into this bucket. Besides the credit report you may be asked to provide 12 months of cancelled rent checks if you have thin credit.
Cosigned loans can be “removed” from your debt ratio if you provide 12 cancelled checks from the person other than you making the payment.
You will need a letter of explanation for any derogatory items on your report. The letter must state what happened, why it was beyond your control and why it will never happen again.
The other items you will need to bring are for identity and processing purposes.
Copy of your driver’s license
Copy of your current insurance declaration page or name and phone number of your agent
Copy of your most recent mortgage statement for a refinance
Letter of explanation for every inquiry on your credit report
This will get you started! We can ask for just about anything that could be a red flag so stay flexible and be prompt with the documentation so your loan can fly through the system with the greatest of ease! Most of the time, Victory Funding can close your loan in 30 days or less with your cooperation!
