What must a borrower provide to document their income when applying for a mortgage?

When applying for a mortgage, a borrower is required to provide comprehensive documentation of their income to demonstrate their ability to repay the loan. This documentation typically includes pay stubs that reflect current earnings, W-2 forms from employers that detail annual income, and tax returns that provide information on income for previous years. By presenting a combination of these documents, lenders can verify the borrower's income and assess their financial stability and creditworthiness effectively.

As lenders evaluate potential borrowers, they need more than just one type of document to make informed decisions. Bank statements alone or just recent tax returns do not provide a complete picture of a borrower's current financial situation. Additionally, proof of assets without income verification does not satisfactorily establish repayment capability, as it does not directly relate to the borrower's income stream. Thus, providing a detailed and varied approach to income documentation is crucial in the mortgage application process.