Are you moving up in the world? Ready to settle down? Then it’s time for you to look into buying a home! There are many benefits to buying a home. Tax benefits, security, home equity, and more can be yours! Of course, there are certain requirements you will need to meet to buy a home. Most importantly, there are first time home buyer income needs you have to pay attention to.
If you follow this guide, you are sure to have all your questions about the home buying process answered!
When looking to buy a new home there are several documents you will need to provide. The documents required for a first time home buyer will depend on your source of income.
As someone who is currently employed, the most important document you will need are US Individual Tax Return 1040 Form from the past two tax years. This means that you should include all schedules. You only need to provide the federal portion.
If you have not filed for any of the past two tax years, simply provide your most recent tax return. Along with this, you should fill out and provide the IRS Form 2350 – also known as an Application for Extension of Time to File US Income Tax Return.
Additionally, you should provide pay stubs that cover the past 30 days. For the past two tax years, procure Wage and Tax Statements. This statement can also be known as an IRS Form W-2.
If you own more than 25% of any company, Business Tax Returns (including all schedules) from the past two years are also necessary. These can be IRS forms 1065, 1120, or 1120-S.
Oftentimes people can worry that their self-employment status may complicate matters when buying a new home. Don’t worry! There are only two necessary documents.
As above, you will also need Business Tax Returns (including all schedules) from the past two tax years.
You can achieve proof of your self-employed income through any of the following methods:
Regulatory Agency Document: The name of the business and indications that the business is in good standing, as well as active, must be listed. Regulatory Agency website screenshots are acceptable.
Business License: The name of the business and indications that the business is in good standing, as well as active, must be listed. Regulatory Agency website screenshots can be used.
Certified Public Accountant Letter: The name of the business and indications that the business is in good standing, as well as active, must be listed. It must also verify the same self-employed period that you have given on the loan application.
If you are receiving pension income there are three documents to provide.
First, a pension award letter. The benefit amount should be clear. The letter must indicate that the listed benefit will continue to be received for a minimum of three years from the date of the new mortgage.
Second, bank statements. These need to be from the past two months and show receipt of pension income. And finally, an IRS 1099 Form, or a Miscellaneous Income Form.
There are two types of documents to provide if you receive Social Security Income. First is your most recent tax year Social Security Benefit Statement, or SSA-1099 Form.
The second is bank statements. These need to be from the past two months and show receipt of pension income.
If you receive Social Security Disability Income, an additional three documents are necessary. You must provide all three forms of proof of your Social Security Disability Income.
Social Security Disability Award Letter: This needs to indicate that you will continue to receive the listed benefit for a minimum of three years from the date of the new mortgage.
Bank Statements: These need to be from the past two months and show receipt of Social Security Disability Income.
Social Security Benefit Statement: This is also known as Form SSA-1099 which is mentioned above. However, it must specify that you receive disability income. Provide forms for the two most recent tax years.
As a first time home buyer, it is important to provide proof of income like child support and alimony. If you receive child support then simply provide three documents.
Most importantly, provide birth certificates for every child receiving child support.
Then, a document which shows payment of child support and the amount to pay. The amount of time for which you will receive the child support should also be indicated. It must indicate that the child support will continue to be received for a minimum of three years from the date of the new mortgage.
This document can take the form of a:
Lastly, bank statements of deposits from the past 6 or 12 months, depending on lender specific requirement. These can also take the form of check copies if bank statements are not available. Either should list the originating entity.
Just two documents are necessary to provide proof of alimony income. As with almost all of these steps, bank statements are necessary.
They should be statements of deposits from the past 12 months. These can also take the form of check copies if bank statements are not available. Either should list the originating entity, and checks should have proof that they have cleared.
Finally, a document that shows payment of alimony or separate maintenance and the amount to pay. The amount of time you will receive the payments should be indicated. To repeat, this document can take the form of a:
As you can see, gathering these documents will be relatively simple for most individuals. If you have followed this guide carefully, it should be simple to meet all of your first time home buyer income needs.
Once you have all of your documents, no doubt you are curious about other things you should know for buying real estate. To learn all about closing costs, credits, and price reductions, check out our guide!