Thinking of buying a home this year? Then it’s best to know the minimum mortgage requirements in your state in order for you to find the one that best suits your current financial situation. Applying for a mortgage may seem like a little intimidating for a first-time homebuyer, but with the right preparation you’ll know what to do, the documents needed, as well as what to expect from your lender.
With the ongoing coronavirus pandemic, lenders have tightened and adjusted their requirements to the changing market conditions. Lendingtree has created a fantastic summary of the 2021 minimum mortgage requirements by loan type
Property in Texas is relatively affordable compared to the rest of the U.S. as it is the 15th lowest median home value. SmartAsset has listed Today’s Mortgage Rates in Texas.
To obtain a mortgage approval today, you are expected to provide a full set of documentation verifying your financial and personal life. To get a head start, you need to provide and prepare the following documents.
Mortgage Application Information Required
- Full name and birth date
- Social Security number and phone number
- Marital status, number of children and their ages
- Residence history for at least two years
- Employment history for at least two year (company name(s), address(es), phone number(s), and your title(s))
- Income history for at least two years (including commissions, and bonuses)
- Asset account balances (including all checking, savings, investment, and retirement accounts)
- Debt payments and balances (all fixed debt obligations like credit cards, other mortgages, student loans, car loans, alimony, or child support)
- Bankruptcies or foreclosures confirmation within the past seven years (including any lawsuits, or if you co-sign on any loans)
- Confirmation if any part of your down payment will be borrowed.
Income Verification
- W-2s from current and past employers in the past two years
- Pay stubs from the last 30 days signed by employer
- Documentation for other types of payment received (e.g. overtime compensation, bonuses)
- All pages of personal federal tax returns for the past two years
- IRS Form 4506-T (signed and dated)
- Copy of the court order along with bank statements or canceled checks for alimony or child support.
- Letter from agency or organization if you receive Social Security income, Disability or VA benefits
- Letter explaining any gaps in employment in the past 2 years
Self-employed, freelancers and independent contractors will need to provide additional documents:
- Corporate 1120S/partnership 1065 tax returns for the past two years, if you own 25% or more of the company
- Year-to-date profit and loss statement and balance sheet
- Most recent personal 1040 tax returns with all schedules from the past two years
Asset and Debts Verification
- Bank statements for two to three months to verify your income, savings balances and source of your down payment
- Documentation for large deposits, if there are any, to explain where the funds originated\
- Retirement and investment accounts for two to three months (individual retirement accounts, 401(k)s, stock investments and certificates of deposit)
- Gift letter (if a friend or relative plans to give you money for this purpose)
- A list of all names, addresses, account numbers, balances, and monthly payments for all current debts with copies of the last three monthly statements
- If you are paying alimony or child support, include marital settlement/court order stating the terms of the obligation
Credit Verification
- The lender will ask for your permission to check your credit history and credit score.
- Payment history for utilities, cellphone, cable TV, car insurance and other expenses
- Credit explanation letter for late payments, collections, judgments or other derogatory items
Other records
The list of documents listed above is only the minimum mortgage requirements for most Texas lenders. The actual list may vary depending on your financial situation. While all borrowers have the standard required documents, salaried borrowers have different additional documents compared to self-employed borrowers. It’s best to ask your lender a list of paperwork that you might need to provide so you can start checking and collecting these documents before you even begin the mortgage application process.
Homeownership comes with rewards, and long term commitment to the responsibilities attached to owning home. Lenders will not just give you a huge loan right away. They will evaluate you’re financial health and assess whether or not you’re prepared for the biggest loan that you’ll probably make. There’s a lot you can do to get your application approved and move forward with buying your dream home in Houston. One is hiring a realtor to help you from start to finish, which includes preparing for mortgage pre-approval and approval. Home buying can be stressful and overwhelming, but with the right person helping you all the way you can go through the homebuying process well-prepared and definitely avoid the heartache of getting rejected for a mortgage.
Are you currently working toward realizing your dream of home ownership? What steps have you taken?
ApexPro will help you create and implement a more realistic plan to get you approved for a mortgage loan. Contact us today for more mortgage and home buying information.
About ApexPro Real Estate
ApexPro Real Estate Group is a full-service real estate brokerage specializing in single family and attached residential properties throughout Houston and the surrounding areas. We are a privately-held small business that brings together top agents, cutting-edge technology, and unparalleled service to help clients throughout Houston to buy and sell real estate — and enjoy themselves every step along the way. Our client reviews exhibit our dedication to help our clients extends beyond the closing table and we would love to earn your business.