The mortgage application process can feel like the scariest part of the home buying process. The best option for first time home buyers is to get pre-approved. The pre-approval process can start up to 120 days before you begin shopping for a new home. If you're wondering how to get pre-approved for a mortgage, you will need to provide lenders with documents proving income, source of down payment, and assets and liabilities in order to be pre-approved.
There are things you can do to prepare for this process and make sure you're ready apply. Some information you will be able to send online or over the phone, but there are some documents that you will need to collect and bring to your lender. We put together a list of things you need to bring to make this process easier.
Proving Your Income
When applying for a mortgage, you will need to prove your employment to the lender before you an be approved.
- A letter from your employer to prove length of employment and salary
- A record of employment income (such as a pay stub, or T4 slip)
- If self employed, at least two years of personal income tax returns and financial statements
Source of Down Payment
You will need to provide the lender with documents proving that you have the ability to pay the down payment. Simply saying you have the down payment isn't enough - to be pre-approved, you need to provide lenders with proof. This proof comes in the form account numbers and locations for your bank accounts and investments.
Information About Assets
You will also need to provide your lender with information and documentation about any of the following assets that are applicable to you:
- All vehicles
- Investments and interest income
- Retirement savings accounts
- Any sizable collections
- Other real estate investments (cottages, etc)
Information About Liabilities
You may also be required to provide information and documentation about any liabilities. Your liabilities include any debts or financial obligations. These may include any of the following:
- Balances and limits on all credit cards, including store credit cards
- Any child support or spousal support payments
- Loans on your car, or if you lease your vehicle you may be required to provide a copy of your lease agreement
- Information about lines of credit
- Remaining balances of student loans
- Balances of any other loans
As you get ready to begin the process of buying your first home, download our free real estate glossary. This will help you understand some of the real estate jargon, so you can navigate this process more easily.