When you get a home loan, you may notice that it says “approved with conditions.” What does that mean? There’s no need to worry. This is standard procedure for many loans where you will need to provide extra documentation so the lender underwriter may continue to get the loan approved.

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When your loan is approved with conditions, the lender wants to take extra steps to ensure that you are suitable for the loan. Conditional approval typically comes after your initial loan approval and dives deeper into your financial history.

You Will Need To Provide Extra Documentation

approved with conditionsProvide all requested documentation to your lender as soon as possible! Doing so will help the loan approval process continue and show the lender that you are serious about buying.

Gift Letters

If you received a financial gift of $5,000 from your grandmother to use for a downpayment, you would need to provide a gift letter for that deposit. Gift letters details who the money was from, their relationship to you, the gift amount, dates funds were received, etc.

Letters Of Explanation

A letter of explanation is a brief document used to explain anything in your financial or employment records that an underwriter may not fully understand. For example, if you are self-employed, a letter of explanation will explain your monthly income. This is especially important if you have made large deposits into your account. Lenders will want to make sure that you are not taking out a loan to pay your downpayment.

Proof Of Employment

Did you have gaps in your employment? Lenders want to be reassured that you have a stable income and can repay your home loan. Provide documentation of your employment history, including pay stubs, and job offer letters. This is also where a letter of explanation would come in, explaining any gaps or that you are starting a new job soon.

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The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.