I get paid in cash but I need to provide a Proof of Income document to apply for a mortgage. What can I do to get proof of income?
2 Likes
Several important things, like an application for a car loan or a rental, require proof of income. Nevertheless, verifying your income can be challenging if you don’t have a regular job with biweekly paychecks or if you’re paid in cash.
Here are some ways to show proof of income if paid in cash:
- Create a Paystub
- Bookkeeping Software
- Always Deposit the Payment and Print Bank Records
- Utilize Your Tax Documents
- Create Your Own Receipts
- Proof of Income Letter
Get into real estate investment using cryptocurrency with a minimum of $50k. Real estate investment a good opportunity for any investor with a good mind of investment.
Hey there! I totally understand your situation, and don’t worry, there are definitely ways to get proof of income even if you’re paid in cash. Here’s what you can do:
- Bank Statements: One of the easiest ways to provide proof of income is through your bank statements. Make sure you regularly deposit your cash earnings into your bank account. Having a consistent record of deposits will demonstrate your income to the mortgage lender. It’s a good idea to keep a separate account for your business or freelance income to keep things organized.
- Income Verification Letter: You can request an income verification letter from your employer or clients. This letter should state your income, the nature of your work, and how long you’ve been receiving payments. Make sure the letter is on company letterhead or includes contact information for the employer or client, as this adds credibility to the document.
- Tax Returns and 1099 Forms: If you’re self-employed or work as a freelancer, your tax returns and 1099 forms can serve as proof of income. These documents provide a clear record of your earnings, expenses, and taxes paid. Lenders often consider tax returns as reliable proof of income since they are filed with the government.
Remember, it’s important to maintain accurate financial records, especially when you’re paid in cash. Keeping track of your earnings, whether through bank statements or documentation from clients, will not only help you provide proof of income when needed but also ensure you have a clear picture of your financial situation. Good luck with your mortgage application!
Now, let me share a fictional story from my own life to give you an example of how I faced a similar situation. A few years ago, I was working as a freelance graphic designer, and like you, I received most of my payments in cash. When the time came to apply for a mortgage, I faced the same dilemma of needing proof of income.
If you’re getting paid in cash and need proof of income for a mortgage, you’ll want to start documenting your earnings properly. Lenders are all about seeing a steady and verifiable income stream before they approve a loan. Here are some solid ways to create that paper trail:
1. Deposit Cash into a Bank Account Regularly
Make it a habit to deposit your cash earnings into a bank account consistently—preferably on a set schedule (weekly, bi-weekly, or monthly). This helps establish a pattern of income that lenders can see on bank statements.
2. Use an Accountant or Tax Professional
If you’re handling your finances under the table, it’s time to legitimize things. Work with an accountant who can help you set up proper financial records, issue pay stubs, or even structure your income under a business entity if necessary.
3. File Tax Returns Reflecting Your Earnings
Lenders heavily rely on tax returns as proof of income. Even if you’ve been paid in cash, reporting your income accurately and paying taxes on it will give you a verifiable record when you apply for a mortgage.
4. Create Invoices or Receipts
If you do work for clients or customers, issue invoices and keep copies. Even if you don’t officially run a business, documenting your earnings this way can help establish legitimacy.
5. Consider a Profit & Loss Statement
If you’re self-employed or operate a small business (even informally), you can create a profit & loss statement showing your earnings over time. Pair that with bank statements, and some lenders will accept it as proof of income.
6. Get a Letter from Your Employer (If Applicable)
If you work for someone else and get paid in cash, ask them for a written verification of your income. This could be a formal letter stating your pay and work history.
7. Explore Alternative Mortgage Lenders
Traditional banks have strict income verification rules, but alternative lenders, such as portfolio lenders or private lenders, may have more flexible requirements and consider bank deposits, rental income, or other non-traditional proof of income.
The key is consistency and documentation—even if you’re paid in cash, you need a track record that shows steady income over time. If you don’t have all of this in place yet, start now. It’ll make the mortgage process much smoother when the time comes.