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ABC’s of Qualifying for A Home Loan in California
Posted by intodoorsblog — December 20, 2020
Hello reader, this blog post will help you better understand the mortgage loan process and what will, and what may be required from you before and during the loan process when purchasing a home. The first thing to understand is that there are three main categories that mortgage companies will be looking at when taking a mortgage application to possibly work up a preapproval letter to eventually reach the end goal of getting you approved for your new home loan.
Let’s dive into what exactly those three categories are:
  • First being Credit. When applying for a mortgage loan the first rule or protocol is that a lender will ask to pull your credit to have a look at what your three credit scores are to determine first if you have a qualifying credit score in order to proceed to the next step in the preapproval process.
  • That’s Employment/income. The bank will be wanting to know things like what your current job status is, how do you get paid, how much do you make annually, are you an employee or are you self-employed, how long have you been employed with said job etc.
  • To move to Assets. Looking into your assets will better help the lender determine if you have enough liquid assets (Readily Available Money) for a down payment etc. that you may have access to.
Let us investigate these three categories in a little more detail.

3 Categories of Qualifying for A Home Loan in California

1. Credit

This is a pretty simple one as every mortgage company will need to pull a tri-merge credit report which consists of the three main credit bureaus (Transunion, Equifax, and Experian). This is to check for any major derogatory or negative items, confirm if you have qualifying credit scores or not to better help the lender put a plan together that works best for you, rather good or bad credit. These items are things like bankruptcies, foreclosures, delinquent federal or state debt, etc. as well disputed items. Most mortgage programs are looking for a score of at least 620.

2. Employment/Income

You will need to show consistent income to qualify as well. The lender will be looking mostly at a two-year history. You will need to provide the last two years of w2’s/1099s and full tax returns as well as the last 30 days of your current paystubs. If you have recent retirement income you will need to provide your most recent award letters as well, and or your most recent deposits to your financial institution. If you are self-employed the lender will need to verify your business and will also need any business returns if applicable.

3. Assets

For this, your lender will be looking for the last couple of months of all bank statements, 401k/retirement statements, stock/bond, and other investment accounts (You will want to make sure you provide ALL the pages of these statements). The Lender will be looking for the funds that will be used for a down payment (some programs will require a minimum of 3%) and additional funds for reserves (these will be required at times to help with approval in certain circumstances).
The last thing to remember is that during the processing of your loan these items we collect may lead to additional requests from underwriting. Providing all requested documentation will help insure we meet all your commitment dates and allow us to get your file through the underwriting process to meet your closing date.
Below is a list of items that the lender and underwriter will need, and may request from you (If Applicable) in order to approve your loan.

Requirements to Qualify for A Home Loan in California

  • Complete A Loan Application
  • Sign A Borrower’s Authorization Form
  • Provide Copy of Valid Driver’s Licenses and Social Security Card
  • 30-60 days of official paystubs (need your names and name’s & addresses of your employer(s) on them)
  • Last Two to Three Years W2s & 1040’s/1099s
  • Last Two to Three Years Full personal federal tax returns
  • Last 2-3 Months (60-90 days) official statements of ALL assets (checking, savings, 401k/IRA, etc. (All Pages (even if the page is blank****) official statements are required; screenshots or browser print accounts may not work
  • If a Veteran, provide DD214 & letter of eligibility
  • If refinancing or own a rental, your mortgage statement is needed
  • Further information or records may be requested or needed to complete the loan process. There will be additional items needed though-out the processing of your loan. Please make sure you provide all documentation in a timely manner to avoid any delays with closing
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About Author:
Anthony Haulcy

Award-Winning, Multi-Million Dollar Producing Real Estate Broker and Mentor to the Masses. 
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