Proof of Income for Mortgages
In July 2010, the Dodd-Frank Act established rules for financial reform, including mortgage lending. The Dodd-Frank Act did away with "stated income" mortgage loans and requires potential buyers to provide proof of income before receiving approval for a mortgage loan. Required documentation depends on the buyer's employment status.
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Types
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You may count funds from employment, self-employment, public assistance, alimony, child support, Social Security benefits or pension disbursements in your aggregate income.
Significance
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You must provide proof for each type of income claimed. For example, retirees must furnish a statement of benefits from the Social Security Administration, along with the last two bank statements showing the deposit.
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Considerations
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Mortgage lenders require self-employed buyers to provide the most recent quarterly profit/loss statement. Some lenders might also request recent bank statements.
Expert Insight
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According to the U.S. government website, Making Homes Affordable, the typical borrower only needs to provide the last two pay stubs that show year-to-date earnings.
Effects
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You aren't required to disclose income received from alimony, child support or separation benefits. That can be beneficial if the payments aren't reliable.
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References
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