Lenders ask for the necessary 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. 

    For example, if your income has been stable for the last few years, you’re more likely to get approved for a loan and better terms. Meanwhile, pay stubs show recent income to show lenders you’re earning the same amount as reported on your tax returns. 

    However, not everyone has pay stubs. Freelancers, entrepreneurs, and business owners work for themselves, so they don’t get regular paychecks like regular 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 and bank statements—to demonstrate their ability to repay a mortgage. 

    Documents you need to buy a house

    Whether you need pay stubs to buy a house depends on your employment status and type of employment. Again, business owners and freelancers can provide proof of income for a mortgage in several ways. However, employees must show pay stubs and tax returns as proof of income for a loan to demonstrate their ability to repay it. 

    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.

    There are several types of documentation you’ll need to provide to your lender to qualify for a loan, including the following: 

    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, including conventional loans for first-time buyers and 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 bill 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. 

    Bank statement

    If you don’t have pay stubs because you’re not a regular employee, you can provide proof of income differently. 

    Many lenders will accept bank statements in lieu of pay stubs, especially if you can provide tax returns stating your freelance or business owner status. However, depending on the lender, they might require you to apply for bank statement loans instead of conventional loans. Bank statement loans are non-QM loans that allow you to qualify for a mortgage based on your bank statements. 

    Your bank statements will show lenders how much you earn from your business or freelance activities, allowing them to track payments and increases in your account balances. However, not all lenders or loans allow you to qualify based on your bank statements. For example, FHA loans don’t offer bank statement loan programs. However, many loans will require them before approving your loan as additional proof of income. 

    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. 

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    Homebuying documentation: Frequently Asked Questions

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

    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 usually always required regardless of loan type. However, they’re 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. 

    What types of loans can I get for a house if I don’t have 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. 

    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. 

    How many pay stubs do I need for a mortgage?

    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 2 pay stubs. 

    Gather your documents

    Proof of income for a loan is one of the most important documents you’ll need to qualify. Income verification for a mortgage loan is crucial to lenders because they need to determine your ability to repay the loan and how much you can afford to borrow.

    Gather your documents before applying for a loan to make the process as straightforward as possible. However, 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. Request a quote today.  

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    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.