What Are Mortgage Lenders Allowed to Ask Borrowers?

When you apply for a mortgage, expect to be asked to prove your income, verify your employment and allow your tax returns to be reviewed. Lenders frequently ask questions that may seem out of bounds, but they are actually legal and necessary to be able to evaluate you as a borrower.

For example, questions about where exactly every dollar deposited in your bank account comes from may seem excessive. But mortgage lenders must document everything about your finances to prove to underwriters that you can repay the loan.

Key takeaways

  • Mortgage lenders may ask applicants a series of questions about their finances.
  • Lenders often want to know more about your income, assets, debts and credit history.
  • Mortgage lenders are also legally allowed to ask questions about an applicant's ethnicity and marital or divorce status.
  • One question a lender may ask you is whether you are part of a lawsuit.
  • Lenders are not allowed to ask if you are planning to start a family or inquire about your health.

Typical questions from mortgage lenders


Lenders need to make sure you have enough regular income to reliably make your mortgage payments. Typically, lenders require at least two recent pay stubs to prove your income, but some lenders will also require tax returns, particularly if you are self-employed.

Income discrepancies can trigger additional questions, especially if your income has decreased for any reason, such as a bonus or commission reduction. If you receive child support, Social Security, or other payments other than salary, you will need to provide documentation that the income will continue.

Task History

Most lenders ask about your recent employment history to assess whether your income will be stable. They usually want to see a two-year employment history and will ask a contact to verify what you say about your employment. In some cases, lenders may ask to see your diploma or transcript to verify that you were in school when you said you were.


Lenders want to know where your assets come from to make sure you're not borrowing money from someone for the down payment. Gift letters are required and must meet lender restrictions if you are receiving assistance with your home purchase.


Your debts will appear on your credit report and will be calculated as part of your debt-to-income ratio as well as your housing expense ratio.

Consider reviewing your credit history before applying for a mortgage. Find out if you want to work on reducing your debt before applying. Also look for any errors in your credit report and report them immediately.

Credit history

Your credit score is an important part of your loan application, but lenders will also review your report to check for past credit inquiries and credit problems. If you've made a number of credit inquiries recently, lenders may ask if you've taken out any other loans or new credit cards that don't yet appear on your report.

You can order a copy of your credit report from the three major credit reporting agencies through Annual Credit Report.com. You are entitled to a free copy of your credit report each year.

Other Lender Legal Issues

Mortgage lenders may also ask questions about you that go beyond your finances. Some of these issues are legal while others are not. Here are some things lenders can legally ask about:


To avoid discrimination based on a person's ethnicity, the Department of Housing and Urban Development (HUD) actually requires lenders to inquire about the race of borrowers. HUD may then review the lender's records to ensure that the lender is not systematically denying minorities or charging them higher fees.


While this may sound like a lawsuit, especially if you are the plaintiff, it should not impact your home financing, lenders still require applicants to ask if they are involved in a lawsuit due to the potential cost and the possibility of a judgment you could face. . These costs could affect your ability to pay a loan.


Lenders are particularly concerned about the financial details of a divorce because of the possibility that you may be held responsible for a former spouse's debts.

If you are trying to include child support or alimony as income on your loan application, a lender will need proof that the income will continue.

Other questions from lenders that are not legal

While it may seem like a lender can ask anything, there are two topics that are illegal to require borrowers to answer about: family planning and health issues.

Lenders may not ask if you are starting a family because they may assume borrowers will quit their jobs if they become pregnant. They could use this response to discriminate against borrowers who are planning to start a family.

Under the Equal Credit Opportunity Act, lenders are not allowed to ask if you are planning to start a family. You may, however, be asked about the number of dependents you have and your marital status, as this information may be used to qualify you as a first-time home buyer and for special loan programs with income limitations. .

Under the Fair Housing Act and the Americans with Disabilities Act, lenders are prohibited from discriminating against borrowers who are sick or disabled. They therefore do not have the right to ask you questions related to your physical condition.

If you believe you have been discriminated against by a lender, you can report it to the Consumer Financial Protection Bureau (CFPB) and/or consult an attorney for advice.

What not to do when applying for a mortgage?

Mortgage lenders want to know that you will be able to repay your loan consistently. So, during the mortgage application process, avoid changing jobs, making a major purchase, or taking on other debt. Don't fall behind on your payments, co-sign a loan, or misrepresent your financial situation.

Can a lender ask if you have any medical problems?

No, a lender is not allowed to ask about your health. It's one of the few topics that's illegal to mention, along with whether you're planning to start a family.

Why do mortgage lenders need tax returns?

Mortgage lenders request tax returns, often for two years, to verify that you have the income, investments and other assets you claim to have. Mortgage lenders will also ask for proof of employment and salary, as well as retirement assets.

The essential

Be prepared to answer whatever a mortgage lender asks, but if you think a lender is asking inappropriate or illegal questions, you should ask your lender the purpose of their questions. Or you may want to work with another lender. In general, asking detailed questions about your finances is an important and routine part of the mortgage process.

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