<p>Income stability is the cornerstone of mortgage underwriting. NMHL evaluates both the amount and consistency of earnings to determine whether you can comfortably afford the monthly payment, including principal, interest, taxes, and insurance (PITI).</p> <h3>Standard Documentation for Salaried Employees</h3> <ul> <li>Most recent <strong>30‑day pay stubs</strong> (covering at least two pay periods).</li> <li>W‑2 forms for the past <strong>two tax years</strong>. These verify annual earnings and tax withholdings.</li> <li>Complete <strong>personal federal tax returns (IRS Form 1040)</strong> for the past two years, including all schedules.</li> </ul> <h3>Self‑Employed Borrowers</h3> <p>Self‑employment adds complexity because income can fluctuate. NMHL requires:</p> <ul> <li>Profit‑and‑Loss (P&L) statements for the most recent 12‑month period, prepared by a CPA.</li> <li>Two years of personal and business tax returns (Schedule C, Schedule E, or corporate returns as applicable).</li> <li>Bank statements showing at least 12 months of deposits to verify cash flow.</li> </ul> <h3>Scenario Example</h3> <p>Maria, a freelance graphic designer, earned $85,000 in 2022 and $92,000 in 2023. She provides a CPA‑prepared P&L, two years of Schedule C, and 12 months of business checking statements. NMHL calculates an average monthly net income of $6,400, applies a 25% debt‑to‑income (DTI) cap, and determines she can afford a monthly PITI of up to $1,600.</p> <h3>Actionable Tip</h3> <p>If you anticipate a large deposit (e.g., a tax refund), attach a <strong>letter of explanation</strong> and the source documentation. This prevents the deposit from being flagged as “unverified funds.”</p>

<p>Assets demonstrate your ability to cover the down payment, closing costs, and reserves. NMHL evaluates both liquid and non‑liquid assets, but only liquid assets can be used for the down payment.</p> <h3>Acceptable Liquid Assets</h3> <ul> <li>Checking and savings account balances (minimum 60‑day statement history).</li> <li>Certificates of deposit (CDs) that mature before closing.</li> <li>Money market accounts.</li> <li>Retirement accounts (IRA, 401(k)) – only if a direct rollover or withdrawal is documented and the funds are transferred to a checking account before closing.</li> </ul> <h3>Non‑Liquid Assets (for reserves only)</h3> <ul> <li>Home equity in an existing property.</li> <li>Investment accounts (stocks, bonds) – must provide a 30‑day transaction history.</li> <li>Cash value of life insurance policies.</li> </ul> <h3>Down‑Payment Percentages by Loan Type</h3> <ul> <li><strong>Conventional</strong>: 5%–20% down; 3.5% possible with a qualified first‑time buyer program.</li> <li><strong>FHA</strong>: 3.5% down (minimum credit score 580) or 10% down for scores 500–579.</li> <li><strong>VA</strong>: 0% down for eligible veterans and active‑duty service members.</li> <li><strong>USDA</strong>: 0% down for eligible rural properties.</li> </ul> <h3>Real‑World Example</h3> <p>John and Lisa are buying a $300,000 home with a conventional loan. They have $12,000 in a savings account and $8,000 in a CD that will mature two weeks before closing. Their combined liquid assets total $20,000, which meets the 6.7% down‑payment requirement (20% of $300,000 = $60,000; they qualify for a 5% down‑payment program, requiring $15,000). The extra $5,000 will cover estimated closing costs of $3,500 and leave $1,500 in reserves.</p> <h3>Actionable Tip</h3> <p>When transferring funds from a retirement account, obtain a <strong>letter of distribution</strong> from the plan administrator and a copy of the wire receipt. NMHL requires both to verify the source.</p>

<p>The final phase of the mortgage application checklist focuses on the financial details that occur on or just before closing day.</p> <h3>Typical Closing Cost Breakdown</h3> <ul> <li><strong>Origination fee</strong>: 0.5%–1.0% of the loan amount.</li> <li><strong>Title search and insurance</strong>: $800–$1,500.</li> <li><strong>Recording fees</strong>: $100–$300.</li> <li><strong>Escrow deposits for taxes and insurance</strong>: Usually 2–3 months of property tax and 12 months of homeowners insurance.</li> <li><strong>Pre‑paid interest</strong>: Calculated from closing date to the end of the month.</li> </ul> <p>NMHL provides a <strong>Good Faith Estimate (GFE)</strong> within three business days of receiving a complete application, allowing you to compare costs with other lenders.</p> <h3>Required Disclosures</h3> <ul> <li>Loan Estimate (LE) – Must be provided within three days of application.</li> <li>Closing Disclosure (CD) – Must be delivered at least three business days before closing.</li> <li>HUD‑1 Settlement Statement (for reverse mortgages).</li> </ul> <h3>Final Checklist Items</h3> <ol> <li>Review and sign the Closing Disclosure.</li> <li>Provide a certified or cashier’s check for the down payment and closing costs, or arrange a wire transfer (NMHL provides wiring instructions).</li> <li>Bring a valid photo ID to the closing table.</li> <li>Confirm that the homeowner’s insurance policy is active on the closing date.</li> </ol> <h3>Actionable Tip</h3> <p>Schedule a final walkthrough 24‑48 hours before closing. Verify that any agreed‑upon repairs are completed and that the property is in the condition described in the contract.</p>