A Pre-Approval Checklist for First-Time Homeowners

by Nancy Brenseke 05/16/2021

Buying your first home can be stressful enough without worrying about whether your mortgage loan pre-approval is going to go through. That’s why it’s such a good idea to know the requirements before you narrow down your home search.

Here are the top items your mortgage broker or lender will need in order to pre-approve you for a loan.

1. Proof of Income

W2 employees will need pay stubs, IRS 1040 forms and copies of their W2 form for the last two years.

For self-employed individuals and small business owners, the burden of proof is higher. Besides 1099 MISC forms, you may need to submit a letter from your accountant stating that your business is still active and a profit-and-loss sheet. 

2. Asset Information

In addition to the regular taxable income you are bringing in, the lender will want to see proof of other assets, including savings, investment accounts and written documentation of a family member’s intent to gift you money.

These assets will let the lender know if you can afford a down payment, pay for the closing costs on the loan, and have enough cash reserves to afford the transition into homeownership.

3. Employment Verification

Lenders want to know you have stable employment. Thus, they request a letter from your employer to verify your employment status and the salary you’re earning.

Self-employed individuals will need to submit at least two years of their complete 1040 forms instead of going through the traditional process. 

4. Credit Information

Before they will pre-approve a loan, the lender makes a hard inquiry into your credit. You will need a credit score of at least 620 to qualify for a conventional mortgage loan or a Federal Housing Administration Loan with zero percent down. The government may approve borrowers for an FHA loan with a score between 580 and 620 if they can make a sizeable down payment.

In order to qualify for the lowest interest rates available — typically the ones you see advertised — you must have a credit score of at least 760. Sometimes, it is worthwhile to defer applying for pre-approval until you can raise your credit score. Why? A lower interest rate can save you tens of thousands of dollars over the life of the mortgage.

5. Personal Information

Finally, the lender will want to verify your identity by requesting copies of your driver’s license, social security number and signature.

About the Author
Author

Nancy Brenseke

I love the ocean, sand and sunshine! That's why I call Hilton Head Island/Bluffton my home! I relocated to Hilton Head Island over 20 years ago from North Carolina after graduating from East Carolina University - Go Pirates! I continue to be successful in real estate for the past 13 Years and with my experience working with top resorts and gated communities, I have cultivated attention to detail, understand the importance of listening first and have the positive "Can Do" attitude in all situations. I offer my sellers and buyers the BEST advice to achieve their real estate goals. I enjoy spending time with my family boating on the May River, attending festivals along Old Town Bluffton and building sandcastles on HHI beaches.  

"Nancy Brenseke is the type of realtor that everyone should contract to sell their property. She is very knowledgeable and gave us valuable information when listing the townhome. The whole process went smoothly and Nancy was responsible for that. She always communicated with us which kept us confident that all aspects of the closing were under control and on track. I highly recommend Nancy Brenseke." ~ Deb Bluffton, SC

"I would highly recommend using Nancy for your real estate needs. She is extremely knowledgeable and responsive. Nancy's representation is top-notch." ~ Jill - Nashville, TN

"Nancy went the extra mile on everything around selling the condo. I would use her again and would recommend her to anyone I come in contact with. Our condo sold in 1 day! She was excellent and hardworker. She helped in all aspects of selling, from marketing with great number of pictures, to home inspection with helping us find contractors to fix the inspection issue so were were able to close." Eric - Cumming, GA