Process for Home Purchase Money Loan
Planning and Preparedness are the key ingredients to making successful offers when buying a home. Completing the loan application and making sure you know exactly what you are qualified for before beginning your home search gives you the confidence to write strong offers with your real estate agent and know that there will be no unforeseen issues that will derail your escrow. When you get pre-approved with us, your loan will be pre-underwritten to specific loan guidelines to ensure there are no surprises during the home buying process. Below we will go into more detail about what documentation to expect to provide your loan officer when getting pre-approved for a purchase money loan.
Documentation For Purchase Money Loan
The documentation needed for a loan is pretty universal across all lenders. Some lenders like to ask for very little up front, and then bog you down with many document requests later in the process once you are in escrow. Others like to do their homework up front and ask for everything they know the underwriter will need to ensure there are no surprises during the loan approval process. In the end, you will end up providing the same amount of documentation no matter which lender you choose, so in our experience, its better to provide it all upfront to make sure that you and your loan officer are not scrambling during an escrow period to resolve issues that could have been avoided by collecting all of the documentation up front. Here is a helpful list of what to expect when qualifying for a conventional purchase money loan.
Documents for Employed Borrowers:
- Government Issued Identification Card (ID)
- Most Recent 2 Months Statements for Bank Accounts (Assets)
- Most Recent 1 Months Pay Stubs (Income)
- Last 2 Years W2’s (Income)
Documents for Self-Employed Borrowers:
- Government Issued Identification Card (ID)
- Most Recent 2 Months Personal Statements for Bank Accounts (Assets)
- Most Recent 2 Months Business Statements for Bank Accounts (Assets)
- Last 2 Years Personal Tax Returns (1040’s with all pages and schedules) (Income)
- Last 2 Years Corporate Tax Returns (1120 or 1065 with all pages and schedules) (Income)
- Last 2 Years K1’s from all sources reported on Schedule E of Personal Tax Returns (Income)
Miscellaneous Documents for All Borrowers (If Applicable):
- Permanent Resident Alien Card
- Passport or Drivers License
- Divorce Decree
- Child Support Order
- Proof of Business License
- CPA Letter verifying self employment status
- Mortgage Statements for all properties owned
- Insurance Declaration Page for all properties owned
- Lease Agreements for all investment properties owned
- Purchase Contract for Purchase Money Loans
- Insurance Quote for subject property if purchasing a new home
- Credit Card Statement if Paying Off Debt to Qualify
-
Do you really need all pages of my statement?
I am often asked if a screenshot is sufficient or maybe just page 1 of X of a bank or asset account statement. Unfortunately, screenshots are not accepted and nor are incomplete statements. An underwriter must ensure completeness of all documentation to make sure that no pertinent information is omitted or overlooked. For this reason, all statements must include all pages of the statement. The easiest way to get this is to go to your banking institutions website and simply download your most recent statements as a pdf file. You can them email or securely upload these files to your client portal so that we can review the file.
-
I am self employed, can we just use my gross income from my business deposits?
Self employed borrowers are often faced with challenges of getting qualified for a mortgage because they are able to take advantage of many writes offs and therefore are left with very little taxable income. Unfortunately, this leads to issues when trying to qualify despite having a very healthy and profitable business. Conventional Guidelines state that any self employed borrower must be self employed for at least 2 years to be eligible to use self employed income. The guidelines go on to state that for any self employed borrower with 5 or more years in business, they can qualify with just the most recently filed tax returns. So the question is, what are we looking for on the tax returns and how do we qualify the income. The answer to this can be simple or complex depending on how your business is set up and how you file your taxes. The bottom line is, we will need a copy of both your personal and corporate tax returns to accurately establish what is your qualified income. To review your self employed income with us to determine your exact qualified income, contact us for free consultation.
-
Do I need any money to buy a house?
Although it may be possible to buy a home with absolutely no money out of pocket, it would be a challenge, especially in todays competitive real estate market. With that being said, there are many loan programs out there that offer 0% down or grant programs that will gift a borrower up to 6% towards a buyers down payment and closing costs. This can also be coupled with a seller credit that a buyers agent can negotiate. If these seller credits and grants are combined, it is possible to buy a home with no out of pocket expense, but it would be advisable to plan to have some money available for things like inspections and appraisals etc that are typically paid for directly by the buyer to the 3rd party provider for their services. To learn more about how to buy with very little down, contact us for free consultation.
