Proof of Income 12/6/2022
Proof of Income
Proof of income and document requirements
Proof of income is a document or set of documents that someone, like a lender or landlord(CC Bank/MDG),
requests to verify income and determine the ability of the customer to pay. Proof of income can be income
from a salaried or hourly job, or it can also be passive income, which is income that comes from interest,
capital gains, and stock investments. It doesn’t matter how they get their income as long as they have a way
to verify it with the lender(CC Bank through MDG).
If they’re planning on applying for a loan with CC Bank, they need to show proof of income to get pre-
qualified or pre-approved for a loan, whether that be a conventional loan or any other type of loan.
Objection: Why do I have to send POI?
Every lender will have different requirements in terms of credit scores, down payments, and debt-to-income
ratios, but you will almost always have to show proof of income. This is why we require it, since we cannot
accurately establish your income.
Now different documents are considered more authoritative than others. For example, on some files
verification may accept a pay stub while others may need a combination of a pay stub and a copy of last
year’s federal tax return.
Below are documents you may need to request as proof of income. This isn’t an exhaustive list, but it gives
you an idea of what documents customers can send, where you can get these items, and why some
documents may work better than others. Most of these documents should include:
Customer’s full name
Income amount
Date
Employer name (when applicable)
For Employed Customers
Proof of income documents from the employer can give the most up-to-date picture of your income since it
takes into account any changes in their wages from the past year.
Pay Stubs. Most of the time we will require their pay stub to have their pay period and pay frequency
listed to verify their income. Customers can provide their most recent pay stub as proof of income to
give a more up-to-date representation of your income.
Proof of Income Letter. This can act as both a verification of income and a light letter of
recommendation depending on their relationship with the employer.
W2 wage and tax statement. In some cases Verification may require this document too, if they cannot
accurately establish customers income, even though they are employed.
Tax Documents - Employed or Retired Customers
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Copies of their most recent tax documents are sometimes considered the most reliable sources since these
are legal documents. However, these documents may be difficult to retrieve when customers dont keep the
documents readily available after tax season ends. Nowdays they are mostly in PDF, so most of the time
customers will have them on their phone/computer/email.
These documents are also not as accurate as a recent pay stub since taxes are only filed once a year. Any
raises or additional income received since the last tax season are not reflected h ere, so additional
documents like pay stubs or bank statements may help paint a more precise picture.
Last Year’s Tax Return (1040). This is a complete document that contains all of your sources of income
in one place. Keep a copy of this form handy since it is useful for proving income and other things.
Wage and Tax Statement (W-2). You’ll need to provide W-2s from all employers to give an accurate
snapshot of your income. You can request this document from your employer(s) if you don’t have a
copy on hand.
Pension Distribution Statement (1099-R). Check out this guide to using tax form 1099-R to learn about
all of the instances where you can use this form.
Unearned Income - Government Income
Social Security Proof of Income Letter. Customers can print this statement online with their “my Social
Security account”. Here is a guide on how a family member can access their benefit verification letter
Social Security Administration’s guide. Please learn to differentiate between SSA, SSI ,SSDI, VA
Income etc.
Annuity Statement. An annuity is an agreement between you and an insurance company where you
receive a fixed stream of money in exchange for a lump sum. You can request an annuity statement
from your insurance agent.
Court-Ordered Agreements. Agreements like alimony and child support fall under this category. You
can request a copy of these agreements from the court.
Unemployment Benefits. These give temporary financial assistance to unemployed workers that meet
certain requirements. These requirements are set by their respective state. Customers can contact
their state’s unemployment office directly for a copy.
Workers Compensation Letter. Workers compensation provides assistance to those injured in the
workplace, including wage replacement and compensation for medical treatment. They can get a copy
of this from the insurance company or the court that handled your case.
Proof of Income for Self-Employed Individuals
As we know proving income for a self-employed customer can take a little extra effort if the customer is not
organized. Take a look at the documents below to see what you they can send you to prove your income
when theyare self-employed.
Wage and Tax Statement for Self-Employed (1099). These forms prove your wages and taxes as a
self-employed individual. It’s one of the most reliable proofs of income you can produce since it is a
legal document.
Profit and Loss Statement or Ledger Documentation. This summary of their costs, expenses, and
revenues can demonstrate their income to a CC Bank/MDG.
Business Certificate. Commonly referred to by the name "D/B/A" ("doing business as") a business
certificate creates a public record of the name and address of the owner(s) of a business. Consumers
are entitled to this information and it may not otherwise be readily available. These are different from
state to state, but most self-employed customers will have one.
