How to Get a Preapproval Letter Based on Projected Income
Most prospective home buyers obtain financing from lenders to purchase their homes. An important aspect of the financing process is finding out how much money you can borrow from your lender. A lender's preapproval letter serves several purposes. Most important, home buyers obtain an estimate of what they can financially afford. A lender's preapproval letter provides an upper limit to the amount a lender can loan based on income. Furthermore, preapproval letters serve as negotiation tools, since sellers are more likely to negotiate their sales price when they have proof that home buyers can obtain financing. A lender's loan preapproval letter is contingent on proof of income and other income verification.
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Instructions
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Shop around for a lender. Find a lender that can offer low-interest mortgages without charging exorbitant fees.
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Obtain a loan application from your lender, complete it and return it.
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Provide your lender with two years of documentation proving stable and continuous income. Lenders generally require that borrowers provide at least two years of continuous and stable income to prove they're not likely to default on their loan.
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Give your lender any bonus letters from your employer if you are trying to qualify for a larger loan. Since you will not have two years of income at a higher salary, some lenders will accept other forms of proof of projected income. Alternatively, if you have income from self-employment, provide winning bid letters, requisitions for payment, invoices and pending contract awards.
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Provide consent to your lender allowing him to contact your employer to verify your employment income and upcoming raise. If you are an independent contractor or sole proprietor, offer any other acceptable forms of verification upon request.
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Tips & Warnings
The Federal Housing Administration administers the federal mortgage loan program. Eligible first-time home buyers and low-income home buyers can apply for government-backed loans. The Federal Housing Administration requires approved FHA lenders to comply with strict underwriting regulations and may refuse extending a loan based on projected income.
Since real estate laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.
