88% of home buyers will choose a financing option when they purchase their home. Before you finance a home, however, you have to find the right place to buy.
House hunting can be a lot of fun, and once you find the perfect place, you might be so excited to move in that you don’t think about all of the steps that you have to take before getting there. If you’re entering the home buying process, you’ll have to prove your income for certain things, like applying for a mortgage.
What is proof of income? Do you know how to prove income if you need to or what documents you will need?
Learn about what types of documents work for this purpose below.
What Does Proof of Income Mean?
Proof of income is proof that you get paid the amount you’re saying you get paid. Usually, this is a requirement if you’re applying to something that you’ll have to pay back over time, like a mortgage, personal loan, or rental lease.
You will only be able to provide specific documents, which we will cover below, for your proof of income to be valid. Otherwise, the lender may decide that you are ineligible for what you’re applying for.
You can form a proof of income letter to summarize your income and employment, but you’ll still need to provide additional documentation. You can choose to write this yourself, or you can have your employer, accountant, or another involved professional draft the letter for you. This letter should make it very clear what you earn, whether that is an hourly wage or salary.
Proof of Income Documents
Some lenders will have more specific requirements for documents than others. As an example, there are lenders that may take a paystub by itself as proof of income while others might require your last tax return as well.
It’s usually better to err on the side of caution, however, and go with the documents that will most likely be approved across the board.
The documents you use for this purpose must include:
- Your whole name
- Social security number
- Amount of income
Some examples of documents that are commonly used include:
- Last year’s tax return
- W-2 or 1099 forms
- Bank statements
If you have unearned income, such as income that is government-issued, you also have options available to you. It may be in your best interest to talk with a social worker about what types of documents will work best, but typically, you will be able to use:
- Social Security proof of income letter
- Pension statement
- Court-ordered agreement statement
- Workers’ compensation statement
- Annuity statement
Get Approved Today
As long as you have adequate proof of income and can prove to the lender that you’re able to pay back the mortgage, you won’t have to worry about that aspect of applying for a mortgage!
Home buying is a stressful process for many, but it is worth it when you find the perfect home for you and your family.
If you’d like to get some more tips on home buying or family life, check out our Lifestyle section today.