By Bill Lyons | Updated on October 25, 2024
TABLE OF CONTENTS

    Lenders ask for a variety of documentation to ensure you qualify for a home loan, including job history, tax returns, pay stubs, and other types of proof of income.

    Tax returns help the lender determine your ability to repay based on information about last year’s income. Income verification for a mortgage is crucial because it helps a lender determine your level of risk and whether you can afford to repay the loan.

    However, not everyone has pay stubs. Freelancers, entrepreneurs, and business owners work for themselves, so they don’t get regular paychecks like W-2 employees. Instead, they must verify their income in other ways.

    So do you need pay stubs to buy a house? Yes and no. Regular employees must use pay stubs to document their income for a mortgage lender. However, individuals who don’t have pay stubs can provide other types of proof of income—like tax returns, proof of assets, and bank statements—to demonstrate their ability to repay a mortgage.

    KEY TAKEAWAYS

    • Conventional mortgages typically require borrowers to verify their income using pay stubs and tax returns.
    • Not all mortgages require pay stubs. There are several non-QM loan options that don’t ask for pay stubs and offer alternative income verification options.
    • Bank statement loans, asset-based loans, and DSCR loans are all examples of non-QM mortgage options that don’t require borrowers to provide pay stubs.

    Are Pay Stubs Needed to Buy a House?

    When you make an offer on a home, sellers may ask for a proof of funds letter to make sure you are a serious buyer who has enough money to cover mortgage payments. Your lender will verify your income for similar reasons — they have to make sure you have enough income to pay off your mortgage, so they’ll need to verify it with documentation.

    Pay stubs are typically required when buying a house with traditional or conventional mortgages. Lenders commonly verify a borrower’s income by examining pay stubs and tax returns, using these documents to assess the applicant’s ability to make mortgage payments.

    But do you need pay stubs to buy a house?

    Pay stubs are not necessary for all types of home loans. No-income verification mortgages, which fall under the umbrella of non-QM loans, offer more flexibility in their income verification process and can accept alternative documents as proof of income. These loans that don’t require pay stubs are for borrowers who may not match traditional lending criteria, such as self-employed individuals, freelancers, or those with non-traditional income sources.

    Instead of pay stubs, non-QM loans might accept bank statements, 1099 forms, profit and loss statements, or asset depletion statements as income verification. While these alternative loans may not require pay stubs, borrowers will still need to prove their income through other means.

    How many pay stubs do you need for a mortgage?

    How many pay stubs you need for a mortgage depends on your lender. Most lenders want to see pay stubs from the past 30 days. Remember, your tax returns act as proof of income to show lenders you have a stable source of income. Meanwhile, your pay stubs will show them that your income has increased or stayed the same since last tax season.

    Depending on how often you’re paid, you will typically only need to provide pay stubs for the last 30 days. So if you’re paid bi-monthly, you should only need two pay stubs.

    Documents You May Need When Applying for a Mortgage

    Whether you need pay stubs to buy a house depends on your employment status and the type of mortgage you’re applying for. While business owners and freelancers applying for non-QM loans have more flexibility when it comes to proof of income, W-2 employees will typically need to submit pay stubs and tax returns.

    Below are several types of documentation you’ll typically need to provide to your lender when applying for a mortgage:

    A photo with documents blurred in the foreground on a table with keys and a tabletop house and a person holding a pen to the papers.

    Pay stubs

    Pay stubs show lenders your recent income to ensure you’re making the same amount or more as reported on your tax returns. Since tax returns are filed once a year, lenders must ensure your income has stayed the same since you last filed. 

    Pay stubs are crucial documentation for proof of income for a mortgage. However, whether you need them depends on the loan you’ve applied for. Several types of loans, including conventional home loans and non-QM loans, may determine which proof of income documentation you must provide. For example, non-QM loans may allow borrowers to qualify for a loan without pay stubs because they consider your assets or bank statements as proof of income instead of employer paychecks. 

    If you’re wondering how many pay stubs you need for a mortgage, usually, two will suffice for most lenders. Lenders will also look for payment information over the last 30 days to ensure you make enough to pay your mortgage bills. 

    Tax returns

    Tax returns are another proof of income for mortgage lenders. Most types of home loans, from conventional loans for first-time buyers to some non-QM loans, will require tax returns to prove your eligibility.

    Your lender will use your tax returns to ensure you make enough money to pay your mortgage every month. Providing tax returns from the last few years will show lenders that you have a stable enough income to continue making payments. Most lenders will ask for tax returns going back at least two years, but some may ask for more if your employment situation or income has changed. 

    Letter from employer

    A letter from an employer will confirm your job history. These letters typically state the hire date, employment status, and salary to help lenders learn more about your job history and income. 

    A letter from an employer is a standard piece of documentation; you can usually ask your human resources department to provide one to ensure you have all the necessary information to provide to your lender. 

    Photo ID

    All lenders will need to confirm your identity before they’ll give you a loan. A copy of your driver’s license or another type of photo ID can help them run any background checks to confirm your identity. 

    Credit history

    Apart from financial statements, tax returns, and paystubs, lenders use your credit history to determine if you qualify for a loan. Your credit reports over the last two years can tell lenders whether you’ve experienced any recent credit events or have a history of paying your debts on time. 

    Usually, it only takes a few years to establish good credit to purchase a home. However, if you have derogatory marks, it could take much longer to have a high enough credit score for a home loan. You can still get a mortgage loan with a low credit score, but it means higher interest rates if you qualify.

    Every lender is different, so there’s no universal minimum credit score requirement. However, before applying for a loan, you should aim for fair or better credit. 

    How to Get a Home Loan Without Pay Stubs

    Conventional loans require proof of income through tax returns and pay stubs. However, there are other options than traditional home loans.

    Instead, you can apply for non-QM loans if you don’t have pay stubs. These loans are designed for freelancers, self-employed individuals, and business owners who don’t have traditional forms of income.

    A couple sitting on a couch with a thought bubble in the shape of a house drawn over their heads.

    Don’t have pay stubs? You can learn how to get a loan without pay stubs with a non-QM mortgage instead. Examples of loans you can get without pay stubs include the following:

    • Bank statement loans: With bank statement loans, lenders require bank statements as proof of income for the loan. These are ideal for self-employed borrowers with at least twelve months’ worth of bank statements demonstrating their ability to repay the loan.
    • Asset-based loans: Asset-based loans allow borrowers to use their assets, including checking and savings accounts, investment accounts, and retirement accounts, to secure a mortgage.
    • DSCR loans: If you’re a real estate investor, you can get a debt service coverage ratio loan to help you qualify based on the potential cash flow generated by a rental property instead of job history or income verification.

    Find Loans That Don’t Require Pay Stubs

    Proving you make sufficient income to qualify for a mortgage is essential if you want to be approved. Income verification for a mortgage loan is important to lenders because they need to determine whether you can repay the loan and figure out how much you can afford to borrow.

    While those taking out conventional loans are often required to submit pay stubs to prove their income, this isn’t always the case. Griffin Funding offers a range of non-QM loans that provide alternative means of income verification so that more borrowers can qualify for a mortgage.

    Whether you’re applying for a conventional mortgage or a non-QM loan, gather your documents before applying to make the process as straightforward as possible. If you’re unsure which documents you need to apply for a loan, contact Griffin Funding. Our team can answer any questions and help you find the best loan based on your unique circumstances. You can also download the Griffin Gold app to prepare for homeownership and the mortgage application process!

    Reach out today to learn more about your mortgage options or fill out an online application to begin your homeownership journey!

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    Frequently Asked Questions

    How do I show proof of income without pay stubs?

    Proof of income for a mortgage loan is crucial because it tells the lender whether or not you qualify for a particular program and how much you can afford to borrow. But not everyone has pay stubs. You can show proof of income for a loan without pay stubs in several ways, including the following: 

    • Business records: If you’re a business owner, you can supply business records, such as profit and loss statements, as proof of income for a loan. This document states the income versus the monthly expenses to show lenders your income. 
    • Bank statements: Bank statements show the amount of money deposited each month and expenses to give lenders an idea of how much you have and how much you earn every month. 
    • Tax returns: Tax returns are a common requirement when applying for a mortgage. They can be a good way to prove income over the course of a few years when you don’t have pay stubs. Tax returns can show stability and help lenders determine your ability to repay the loan. 

    Can I get a mortgage if I don't have income?

    Yes, it's possible to secure a mortgage even without traditional income. Particularly, DSCR (debt service coverage ratio) loans qualify borrowers based on a property's cash flow, while asset-based loans consider your liquid assets for qualification. These options provide alternatives for those who may not have conventional income streams.

    How do I know if I can afford a house?

    Figuring out if you can afford a house starts with taking a good look at your finances. First, crunch the numbers on your monthly expenses and see how they stack up against your available funds or potential rental income. 

    Online mortgage calculators can also be a big help here — they'll give you a ballpark figure for monthly payments based on factors like home price, down payment, interest rate, and how long you'll be paying off the loan (also known as the loan term). 

    Don't forget to factor in other costs that come with homeownership, like property taxes, insurance, and regular upkeep. 

    To get a solid idea of what you can afford, think about getting pre-approved for a mortgage. You'll need to gather some documents to get pre-approved, which may include bank statements, information on your assets, and, if it applies, details on rental income or proof of your liquid assets. Going through this process will not only give you a clear picture of your budget, it'll also put you in a stronger position when you're ready to make an offer on a home.

    Bill Lyons

    Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 22 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 10 years in business.