Applying for a mortgage used to be easy: You'd complete an application and the lender would pull your credit score. More often than not, you'd be approved.

But nowadays, lenders require paperwork that documents every facet of your financial life: taxable income, assets, rent payments and more. And there's no escape.

 

Here's a list of items you may need to document income.

 

Paycheck stubs, W-2s

Bank, investment and tax documents
Borrowers generally must supply bank and investment account statements for the last 30 days. An application for a jumbo loan could trigger a request for up to three months of statements. In the past, only self-employed borrowers who went through full underwriting typically were required to present income tax returns. Today, almost everyone is expected to provide a recent tax return, including all the pages and schedules.

 

Borrowers also must sign IRS Form 4506-T, which allows the lender to get a transcript of the tax return from the IRS. This practice "has become an industry standard as fraud prevention," says Brad Blackwell, national sales manager at Wells Fargo Home Mortgage. Don't try to amend a prior year's tax returns to show more income. That's now a no-no.

Profit-and-loss statement
Self-employed borrowers may have to submit a current-year profit-and-loss statement, especially if the year is more than half over or they haven't filed their prior year's tax return.

Rental property income
Borrowers who include rents from investment property in their income need to show the income on their tax return. Canceled rent checks and bank statements showing those deposits might be okay if the property was purchased in the current calendar year. Homeowners planning to buy a new home and rent out their current residence must provide a rental agreement, canceled rent checks and bank statements. They also must have at least 30 percent equity in their current residence. An appraisal might be required at the borrower's expense.

 

Gift letter, paper trail
Borrowers who receive a cash gift toward their down payment should be prepared to provide a letter from the "giftor" that declares the gift isn't a loan. A copy of the giftor's bank account statement showing the funds, a canceled check and the borrower's own statement showing the funds also may be required.

Other documents, letters
Renters must supply 12 months of canceled rent checks and bank statements showing the rent was paid on time. Renters without that documentation can provide the landlord's name and contact information for payment verification.

Borrowers also may be required to provide a copy of a divorce decree, proof of a child's age if child support is counted as income, bankruptcy discharge papers and more. Lenders also may demand letters that explain negative items on a credit report or verify the borrower's motivation for the loan, Miller says.