W-2 Income

• A majority of borrowers in the United States use W-2 income as the basis for their mortgage qualification. This is the tax form given to hourly or salary workers in the United States. A lender may ask for two years of W-2 forms in addition to the two most recent months' pay stubs as verification of income. If the borrower has bonus or commission income, the lender will request full copies of her two most recent years' income tax returns as well to verify income.
  
  

Self-Employed Borrowers

• If a borrower is self-employed, or owns his own business, the lender will most definitely ask for two years' worth of full tax returns to calculate an average income over the span of those years. Additionally, profit and loss statements as well as company balance sheets may be needed to qualify for a mortgage approval. Since many self-employed borrowers do not receive a standard paycheck, the lender needs the additional information.
  
  

Retired Borrowers

• Retirement income is similar to regular W-2 income for most borrowers. The borrower needs to show a monthly statement proving a repeating monthly payment, such as a bank statement or statement from the retirement account. If the borrower receives lump sums from her retirement account, a copy of all recent deposits within a preset time period such as two to three years will suffice.
  
  

Social Security Income

• Many borrowers on disability receive social security income. Each year, the Social Security Administration mails out benefit letters with a detailed list of benefits. A copy of the most recent letter, in addition to bank statements showing the deposit, will be required by the lender. Typically, the lender will require one letter in addition to two to three months of deposit statements.