Here’s Why a Mortgage Lender May Request Additional Documentation


If you want to buy a house, the sooner you gather your financial paperwork, the sooner you can apply for a mortgage. A home is a major purchase, and since the bank is lending hundreds of thousands of dollars, you’ll have to provide the loan officer with countless documents. In fact, the amount of paperwork involved with a home purchase is more than what most landlords request.

It doesn’t matter who you are or what you do, you’ll have to supply copies of your tax returns for the past two years as evidence of consistent income, plus you’ll need to hand over your pay stubs from the past 30 days. The lender also pulls your credit report and reviews your bank statements for the past two months to get an idea of how much you have in reserves for your down payment and closing costs.

This information is usually enough to assess whether you qualify for a mortgage. But sometimes, underwriters request additional information from borrowers. If this happens to you, there’s no reason to panic. It’s the underwriters job to calculate your risk, and to do this, he needs a complete understanding of your financial profile. If you get a call from the lender requesting additional information, provide this information as soon as possible to avoid any delays.

But what type of additional information may an underwriter request? Here’s a breakdown of possible reasons why your lender may request additional documentation from you.

  1. You have an unusual deposit in your bank account

Your mortgage lender needs to see at least 60 days of bank statements from all your accounts. Getting a mortgage involves closing costs and a down payment, and the bank needs to know how you plan to cover these expenses.

When reviewing your bank statements, the underwriter will specifically look for any unusual large deposits within the past 60 days. If you have suspicious deposits into your account, the underwriter will call and ask for an explanation. Be prepared to provide documentation for any inheritances, settlements, or work bonuses you receive. If you receive a large deposit as a gift for your down payment, the lender will need a gift letter from the giver.

  1. You’ve had a divorce

This might come as a surprise, but if you’re divorced the lender will likely need to see a copy of your divorce decree. It doesn’t matter how long it’s been since the divorce. This information is important because the divorce decree has information that doesn’t appear on your credit report, such as specifics about support payments.

If you’re receiving alimony or paying alimony to an ex-spouse, the lender needs this information to accurately calculate how much you can afford to spend on a property. And don’t think you can hide a divorce from the lender. The bank will run a background check, which will reveal past martial statuses.

  1. You’re not a U.S. citizen

When applying for a mortgage, the lender will typically only ask for a copy of your drivers license and you’ll have to provide your Social Security number on the application. Understand, however, that if you check the box stating that you’re not a U.S, citizen, the lender will request a copy of your birth certificate.

  1. You’re self-employed

If you’re self-employed, lenders will use your previous two year’s tax returns to determine mortgage eligibility. However, some lenders may also request a year-to-date profit and loss statement. This is more likely to happen if you’re purchasing a property after the first quarter of a new year. Since you don’t have paycheck stubs like an employee, the lender uses this statement to verify your current income.

  1. You’ve had a short sale, bankruptcy, mortgage modification, etc.

A lender may also request additional documentation if you’ve had a previous short sale, bankruptcy, mortgage modification or foreclosure. This information appears on your credit report, but the lender may need to know specifics about the transaction. So don’t be surprise if the underwriter requests a settlement statement for a short sale, trustee sale information for a foreclosure or statements that explain the details of a mortgage modification and bankruptcy.