When applying for a mortgage to purchase a home, lenders will want to review your income and employment history to determine if you qualify for the loan. One of the key documents they will ask for is pay stubs, which provide proof of your current income.
So how many paystubs do you need to provide when applying for a mortgage? The general recommendation is that you should be prepared to provide your lender with your last 30 days of paystubs. However, the specific requirements can vary depending on your employment situation and the type of loan you are seeking.
Why Lenders Request Paystubs
Paystubs serve a couple of important purposes in the mortgage approval process:
- They verify your income – Paystubs show your employer’s name, your position, and documents your gross pay and net take-home amount. This allows the lender to confirm your income.
- They show consistency of income – By providing multiple pay stubs, you demonstrate a regular salary history, which reduces risk for the lender.
In addition to using paystubs to qualify borrowers, lenders also rely on them to calculate debt-to-income ratios. They look at your monthly gross income on your paystubs and compare it to your monthly debts to determine if your income is sufficient to manage the new mortgage payment.
General Rules on Paystub Requirements
While requirements can vary, here are some general guidelines on what to expect regarding pay stubs:
- Expect to provide your most recent 30 days of pay stubs when applying for a mortgage.
- You may need to provide pay stubs that cover a longer period if you have an irregular income, such as commission or bonus pay.
- Lenders may ask for pay stubs to cover the period back to your last tax return.
- If you’ve changed jobs recently, be prepared to provide W-2s and pay stubs from previous employers.
- Gaps in employment may mean providing additional pay stubs to demonstrate a longer history.
The bottom line is that you should gather pay stubs and related documentation that paint a clear picture of your employment situation for at least the last 30 days, if not longer.
Requirements for Salaried Employees
For prospective home buyers who earn a consistent salary, providing a month’s worth of pay stubs is typically sufficient. This includes people who:
- Are full-time W-2 employees of a company
- Get paid salary or hourly with regular hours
- Have been with their current employer for at least two years
In this standard scenario, the lender is looking to confirm your income based on your current salary. Recent pay stubs from the last 30-60 days provide that documentation.
Requirements for Self-Employed Borrowers
For self-employed home buyers or those with non-traditional income sources, more pay stubs may be required. Typical requirements include:
- 12-24 months of pay stubs may be needed to establish earnings history
- Pay stubs may be needed to supplement other income documentation like tax returns and financial statements
- Lenders may scrutinize pay more closely to look for income fluctuations
Because income tends to be less consistent for the self-employed, extra pay stub documentation helps the lender perform their due diligence.
Requirements for Irregular Income Situations
Special consideration may also be given to borrowers with irregular income patterns and special situations like:
- Seasonal workers – May require 12 months of pay stubs to show full compensation cycle
- Commission-based pay – More pay stubs needed to establish typical commission income
- Bonuses – 2 years of pay stubs to factor in regular bonus payments
- Overtime – Longer history to determine if OT is regular or intermittent
- Hourly workers – Pay stubs to establish typical hours worked per week
- Recent job change – Pay stubs for both old and new job may be needed
- Gaps in employment – More pay stubs required to demonstrate continuity
The lesson is that any inconsistencies or irregularities in income must be documented and explained to the lender. Additional pay stubs help build that clearer picture.
What Information is on a Pay Stub?
A standard pay stub provides a variety of details that lenders use to evaluate income, including:
- Gross pay – Total earnings before taxes/deductions
- Net pay – Take-home pay after taxes and deductions
- Pay period – Such as weekly, bi-weekly, semi-monthly
- Pay rate – Can be salary, hourly, commissions, etc.
- Employer name and address
- Employee information – Name, ID number, job title
- Taxes – Federal, FICA, state taxes withheld
- Deductions – Health insurance, 401k contributions, etc.
- Overtime, bonuses, commissions earned
- Year-to-date earnings – Total earned each year
Lenders will carefully examine pay stubs for consistency and accuracy. Having multiple recent stubs establishes those regular patterns.
Electronic Pay Stubs
Many employers now provide online access to digital pay stubs rather than paper copies. These electronic versions are generally acceptable to lenders with a few caveats:
- Print or save copies as PDFs – Digital images work better than website URLs
- Include the website or portal URL – Adds legitimacy
- Highlight employer name and contact – For lender verification
- Have backups like bank statements – To complement electronic stubs
As long as digital pay stubs are presented thoroughly and professionally, they can provide the needed proof of income.
Alternative Documentation to Pay Stubs
In some cases, alternative documentation may be accepted or required in addition to pay stubs:
- W-2 forms – Show annual earnings if pay stubs don’t cover full years
- 1099-MISC forms – For contractors and freelancers
- Tax returns – For self-employed or to show longer income history
- Bank statements – To verify direct deposit income
- Employment offer letter – If starting a new job soon
- Employer letter – Providing details about applicant’s position and pay
The higher the perceived income risk, the more supporting documents you should expect to provide. The combination of pay stubs, tax docs, bank statements, and letters can provide a complete perspective.
When to Provide Pay Stubs in Mortgage Process
Pay stubs are typically requested at two main points during the mortgage application process:
- Initial application – When first applying, you’ll need to provide the most recent 30-60 days of pay stub documentation. This helps the lender pre-qualify you based on income.
- Underwriting – Additional pay stubs may be requested during underwriting to verify your income as stated on your original application. Any discrepancies or gaps will need to be reconciled.
Come prepared with comprehensive pay stub documentation upfront to avoid delays from requests for additional stubs later.
How to Get Pay Stubs from Previous Employers
While current pay stubs are easy to access, sometimes past ones are needed. Here are some options if contacting previous employers:
- Check old records – Dig through files or emails for old pay stub copies you may have saved.
- Call HR department – Request digital or paper copies of past pay stubs from them.
- Log into old payroll portal – You may still be able to access digital stubs from past employers.
- Review online payroll provider – Companies like ADP and Gusto often archive past stubs online.
- Check tax records – Forms like W-2s may list past employer names and contact info.
- Retrieve from government – The Social Security Administration keeps past reported earnings.
While retrieving old pay stubs can take some legwork, persistence usually pays off in providing needed documentation.
Alternatives When Pay Stubs Are Not Available
In rare cases where pay stubs cannot be located at all for previous jobs, alternatives could potentially include:
- Bank statements – To show payroll deposits from past years.
- Tax returns – To confirm past income reported to the IRS.
- W-2s and 1099s – For annual earnings verification.
- 401k statements – To show retirement contributions.
- HR letter – Stating dates employed, position, and salary.
- Sworn statement – Affidavit attesting to prior income.
While less ideal than pay stubs, these options may help fill income gaps between jobs.
Special Cases: Borrowers without Pay Stubs
For prospective home buyers without pay stubs – such as individuals who are self-employed, earn cash income, or retirees/students living off savings – meeting income documentation requirements takes some extra work. Options may include:
- 12-24 months bank statements – To demonstrate consistent income deposits
- Tax returns – To show recent annual earnings
- 1099s/invoices – Documentation for contract/freelance work
- Profit and loss statement – For business income sources
- Letters from customers – Confirming cash wages for services provided
- Brokerage or 401k statements – For applicants living off investments
- Promissory notes – Borrowing funds to close from relatives
Non-traditional applicants should speak with lenders early about income documentation options. Unique situations may require more creativity.
Co-Borrowers without Income or Pay Stubs
For co-borrowers on a mortgage application who don’t personally earn income – such as non-working spouses or partners – providing pay stubs is not expected or required. Income is based on the working applicant’s earnings. However, lenders may request letters of explanation for how expenses are covered without dual incomes.
The Impact of Gaps in Pay Stubs
Gaps or lapses in providing consistent pay stubs from current or recent employers can potentially jeopardize mortgage approval. Red flags for lenders include:
- Short duration at current job
- Frequent job changes
- Periods of unemployment
- Omission of employers
- Inability to provide requested stubs
To avoid delays or denials, proactively disclose and document any gaps. Explain special circumstances and provide supplementary income documentation to create a complete narrative.
How Pay Stub Problems Can Be Mitigated
If you anticipate that pay stubs may raise concerns, there are a few strategies to mitigate potential issues:
- Provide a thorough explanation – Clearly describe the reasons for any gaps, job changes or variability in earnings.
- Overdocument income – Provide an abundance of supplementary materials like tax docs, bank statements, employer letters, etc.
- Consider a co-signer – Adding a borrower with solid income documentation can offset stub issues.
- Explore alternate lenders – Those that offer more flexible income documentation options.
- Make a larger down payment – More equity reduces the risk for lenders.
- Highlight positive factors – Like strong credit, reserves, stable housing history, etc.
With sufficient context and supporting facts, minor pay stub issues don’t have to be deal-breakers.
When Pay Stubs Are Required for Preapproval vs Prequalification
Prequalification and preapproval are two preliminary stages that gauge mortgage eligibility before formally applying for a loan:
- Prequalification – Initial estimate based on limited documentation like pay stubs. Non-binding and subject to verification later.
- Preapproval – More in-depth underwriting requiring extensive income documentation. Preapproval letters can be used to strengthen offers.
Pay stubs are commonly used for prequalification, while preapproval typically demands more robust documentation like tax returns, W-2s, employment letters, etc. The greater income confirmation of preapproval comes with a deeper dive into your pay stubs and full earnings history.
How Many Years of Pay Stubs Required for Mortgage
While the most recent 30-60 days of pay stubs are standard, lenders may request your full earnings history covering multiple years. Typical requirements are:
- Last 1-2 years of pay stubs – To show stability over time for traditional applicants.
- Last 2+ years of pay stubs – For self-employed borrowers or those will irregular income situations.
- Pay stubs back to last tax filing – To match documentation against tax return income.
- Pay stubs covering entire employment history – If changing jobs while applying for a mortgage.
The further back the mortgage company wants pay stubs, the greater rigor and scrutiny they are applying to income verification. Having 2+ years of pay stubs readily available is advisable.
Should Pay Stubs be Submitted in Any Particular Order?
Logically organizing your pay stubs before submitting them to your lender can simplify their review process:
- Chronological order – Arrange stubs starting with the oldest first.
- Separate different jobs – Group together stubs from same employers/positions.
- Use cover pages – Identify and separate bundles of stubs from each employer or year.
- Provide a summary – Highlight important details like dates, employer names, income change.
- Consistent format – Convert everything to PDFs for easy digital review.
Well organized pay stubs demonstrate professionalism and make income verification easier – increasing the odds for swift approval.
Providing recent pay stubs is a crucial part of documenting income when applying for a mortgage loan. While specific requirements vary, you should generally be prepared to produce your most recent 30-60 days of stubs at minimum. Additional pay periods may need verification for borrowers who are self-employed, have changed jobs, or have irregular income situations.
Pay stubs from current and past employers confirm your earnings history and demonstrate consistent income to qualify for a home loan. Lenders scrutinize pay stubs closely, so be sure gaps and irregularities are fully explained. With solid documentation and thorough organization, pay stubs can position you for mortgage approval.