Documents You Need for Mortgage Preapproval (First-Time Buyer Guide)

Updated February 2026

If you’re a first-time homebuyer, getting preapproved for a mortgage is one of the smartest early steps in the buying process. It shows sellers you’re financially qualified, clarifies your price range, and reduces surprises later. It also makes your offer more competitive in markets like Cross Plains and Middleton, where well-prepared buyers often move faster.

Before we get into specifics, you may also want to read:
How to Get Preapproved for a Home Loan

Why Lenders Ask for Documentation

During preapproval, lenders are trying to determine four key things:

1. whether you can afford the loan

2. whether you have a history of repaying debts

3. whether you have funds for the down payment and closing costs

4. whether your employment and income are stable

Understanding these goals makes the documentation process feel much less mysterious.

Income Verification Documents

Your income determines how much home you can afford. To verify it, most lenders will request:

• W-2s from the past two years

• recent pay stubs (typically 30 days)

• year-to-date earnings statements

• bonus or commission information (if applicable)

If this is your first time preparing financial documents for a lender, the Consumer Financial Protection Bureau offers a helpful overview of how lenders evaluate income and credit:
https://www.consumerfinance.gov/consumer-tools/mortgages/prepare-mortgage-application/ 

If You’re Self-Employed or a 1099 Earner

Self-employed buyers qualify for loans every day, but the documentation looks different. You’ll generally need:

• two years of full personal tax returns

• two years of business tax returns (if incorporated)

• year-to-date profit and loss statements

• business bank statements

To better understand how lenders verify self-employment income, the HUD Handbook provides insight into documentation requirements:
https://www.hud.gov/program_offices/housing/sfh/handbook_4000-1

If You Have Additional Income Streams

If you also earn money through:

• freelance work

• rental properties

• Social Security

• disability benefits

• investment dividends

tell your lender upfront. Many first-time buyers don’t realize these income types can help them qualify, although lenders may need extra documentation to verify consistency.

Employment Verification

Lenders also verify that your employment is stable. To do that, they typically:

• contact your employer

• confirm your job title

• verify how long you’ve worked there

If you recently changed jobs, don’t panic. As long as you stayed in the same field or industry, most lenders consider that stable employment.

Asset Documentation (Down Payment + Closing Costs)

Beyond income and employment, lenders want to ensure you have enough funds for your down payment, closing costs, and any required reserves. For that, they will ask for:

• checking and savings account statements

• investment account statements

• retirement account statements (401k, IRA, etc.)

• proof of gifted funds (if applicable)

If you’re unsure how much you’ll need, this article pairs well with:
How Much Does It Really Cost to Buy a Home in Cross Plains?

For planning purposes, Bankrate’s Mortgage Calculator is a useful tool for estimating monthly payments:
https://www.bankrate.com/mortgages/mortgage-calculator/

A Quick Note on Large Deposits

During preapproval, avoid making large unexplained deposits. Lenders must document where funds came from, and borrowed funds can impact loan qualification. The goal isn’t to scrutinize your spending, but to ensure the down payment isn’t financed.

Credit History

You won’t need to provide credit documents yourself because the lender will pull your credit report. To understand how credit scores affect mortgage options, the MyFICO Education Center offers a clear breakdown:
https://www.myfico.com/credit-education

If you’re working on improving credit before buying, the FTC Credit Guide is also helpful:
https://www.consumer.ftc.gov/articles/understanding-your-credit

Debt and Liability Information

Your debt load affects your debt-to-income (DTI) ratio, a key metric lenders use to determine affordability. Most of your debts — including student loans, auto loans, and credit cards — will appear automatically on your credit report, so you won’t need separate statements unless they need clarification.

Identification and Legal Documentation

You’ll also need to verify your identity. Most buyers will provide:

• a driver’s license or state-issued ID

• Social Security number

• proof of residency or citizenship (if applicable)

Gift Funds, Grants, and Assistance Programs

If you plan to use gift funds from family, your lender may require a gift letter verifying the money is not a loan. Buyers in Wisconsin may also qualify for WHEDA programs that offer down payment assistance or favorable loan terms:
https://www.wheda.com/home-buyers

Additionally, the FHA explains requirements for gift funds here:
https://www.fha.com/fha_article?id=785

Digital Submission Makes the Process Easier

Most lenders now use secure online portals where you can upload PDFs or bank-issued statements. Scanned statements work well, while screenshots often get rejected because they may show incomplete account information.

Quick Checklist for Preapproval

To simplify, here’s a checklist you can refer to:

☑ W-2s (2 years)
☑ Pay stubs (30 days)
☑ Bank statements (2–3 months)
☑ Investment/retirement statements
☑ ID (Driver’s license)
☑ List of debts
☑ Tax returns (if self-employed)
☑ Gift letters (if applicable)

Final Thoughts

Getting your documents organized early makes preapproval faster, easier, and less stressful — especially for first-time buyers. Once preapproved, you can shop with confidence and write stronger offers.

If you’re planning to buy in Cross Plains, Middleton, or the surrounding area, you can schedule a quick conversation to get matched with reputable lenders and start your buying timeline confidently.