Which financial document is needed to verify a borrower's income?

To verify a borrower's income, pay stubs or tax returns are the most reliable documents, as they provide concrete evidence of earnings over a specific period. Pay stubs typically reflect the borrower's current income, detailing their hourly wage or salary and any deductions. Tax returns offer a broader view, showcasing an individual's income over the past year or more, including wages, bonuses, and other sources of income. Together, these documents help lenders assess the borrower's financial stability and ability to repay the loan.

While bank statements, credit reports, and loan applications offer useful financial information, they do not directly verify income in the same comprehensive manner as pay stubs or tax returns. Bank statements reveal cash flow and account balances but do not explicitly confirm the source of income. Credit reports provide insight into a borrower’s credit history and outstanding debts, which are important for assessing creditworthiness, but do not show current income. Loan applications include reported income but rely on the borrower’s self-disclosure, which requires verification through more concrete documents like pay stubs or tax returns.