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6 Documents Every Colorado First-time Buyer Must Have

Are you a Colorado first-time homebuyer? If so, it’s an exciting time to become a homeowner. Property values are rising, mortgage rates are low and owning a home offers a level of freedom that’s unattainable when renting, living with parents or roommates.

The process may seem complex, but your lender will walk you through it step-by-step.

A few of the documents you’ll need include:

6 Must-Have Documents as a Colorado First-time Home Buyer

1. Tax Returns

Lenders want a way to verify your income, and taxes tell the complete financial story. You’ll likely need two years of previous tax returns. You can use your own copies of your returns, or you can request copies from the IRS if you don’t have them.

If you have massive fluctuations in income, this can harm your chances of approval.

For example, lenders may be reluctant to give you a loan if you made $70,000 two years ago and $40,000 this year. However, when your income is similar, they’ll often average the income to better understand whether you can afford a home.

2. Proof of Income Documents

Income needs to be verified, and since there has been time between filing your taxes and applying for a mortgage, the lender will want some form of income proof. You may need to provide the following documents:

  • Pay stubs
  • 1099 forms (self-employed)
  • Direct deposits

Self-employed borrowers will have to have substantial proof of income, and this may also include contracts from clients or customers.

3. Bank Account Statements

Bank, investment or retirement account statements may also be requested. These documents show proof of liquid assets that you can use to make mortgage payments if you lose your job. Furthermore, the lender will examine your accounts to see where your down payment funds are coming from.

If you have had the funds in these accounts for a few months before making a down payment, it will look better for you.

4. Credit History

Lenders can pull your credit history by themselves, but this is something you’ll also want to do. Why? You want to correct any errors or mistakes on your report, have a clear understanding of where your credit stands and also be prepared to explain any negative marks on your account.

5. Identification

The lender wants to verify that you’re truly the person applying for the loan. Multiple forms of identification may be requested, including:

  • Driver’s license
  • Social security card

Photo IDs work best, so be prepared to make copies of these forms of ID.

6. Renting History Documents

Finally, if you’ve been renting, you can request your rental history information. Lenders want to lower their risk, and one good way to show that you’re responsible and make payments on time is to provide proof of rental history.

Canceled rent checks or documents from your landlord may be requested to provide this proof.

If you’re applying for Colorado first time home buyer programs, you may also need to include other documents. For example, grants and CHFA down payment assistance are available that can make buying a home an option.

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