What Is Income Verification?

Income verification is how your lender confirms you earn enough to repay the loan. You will provide documents like recent pay stubs, W-2s, and tax returns so the underwriter can calculate your qualifying income and debt-to-income ratio.

Salaried borrowers typically submit 30 days of pay stubs and two years of W-2s. Self-employed borrowers need two years of personal and business tax returns, and lenders average the net income across both years. For example, if your tax returns show $85,000 and $95,000 in net income over two years, the lender qualifies you at $90,000 annually, or $7,500 per month gross.

Key Facts

• Salaried documents: 30 days of pay stubs + 2 years of W-2s
• Self-employed documents: 2 years of personal and business tax returns + year-to-date profit-and-loss statement
• Verbal VOE: Lenders call your employer to verify current employment, often just before closing
• Gaps in employment: Typically need a letter of explanation for any gap over 30 days in the past 2 years
• Non-traditional income: Overtime, bonuses, and commission usually require a 2-year history to count

Frequently Asked Questions

What if I recently changed jobs?

You can still qualify if you are in the same field or have a strong employment history. Lenders want to see stability, so a lateral move within your industry is usually fine. A complete career change may require additional documentation or explanation.

Do lenders verify income more than once?

Yes. Your income is verified during pre-approval and again during underwriting. Many lenders also complete a final verbal verification of employment within 10 days of closing to confirm nothing has changed.