Understanding Form 1003: Mortgage Application Basics

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When you apply for a mortgage, dozens of documents are involved in the process. From paycheck stubs and previous years’ tax returns to bank statements and copies of your credit report, there’s quite a collection of information you’ll need to provide to your lender. In addition to that, you’ll also need to fill out more than a few forms to start and finish the process of obtaining your loan.

One form that you’re almost certain to see no matter where you apply for a mortgage is called Form 1003. It’s a standard application for getting a home loan, but you might also need to fill it out if you’re refinancing an existing loan. If you’re planning to start the homebuying or refinancing process soon, take a look at more about Form 1003, including what it is, what its purpose is and how you’ll fill it out.

What Is Form 1003?

Form 1003 is a standardized form that’s part of many mortgage lenders’ mortgage applications. Form 1003 was developed by Fannie Mae, and it’s the same as a Freddie Mac application document called Form 65. Fannie Mae and Freddie Mac are federal agencies involved with the mortgage industry that purchase mortgages from smaller lenders in an effort to stabilize housing markets across the United States. Form 1003 is also called the Uniform Residential Loan Application.

In 2021, lenders began to use an updated version of Form 1003. This new version is streamlined and easier for applicants to understand. You can complete the latest version of the form on paper or online. The updates include space for details about newer ways of contacting applicants, such as email addresses and cell phone numbers. There are also new sections where you can list the years you served in the military and tally up your household expenses. 

What Is the Purpose of Form 1003?

The main purpose of Form 1003 is to bring a new level of document standardization to the mortgage industry, but it goes a little deeper than that. When you’re applying for a mortgage, you have hundreds of choices about which lender to go with — there are plenty of national companies along with regional banks to select from. When you take out a mortgage loan, the financial institution that extends you the loan earns a profit from the interest you pay over the years.

Most mortgage loans have terms of 30 years, meaning they’ll take you 30 years to pay off. If mortgage lenders had to wait the entire 30 years for all of their customers to pay off their loans to start seeing a significant profit, they’d quickly run out of money. That’s one reason why lenders commonly sell mortgage loans to larger banks. Two of the most popular buyers of mortgages are Fannie Mae and Freddie Mac. When these agencies buy a mortgage from a smaller lender, that lender has more money to offer another customer a mortgage, and it didn’t take 30 years to save up that money. 

The process of selling a mortgage (or a large bundle of mortgages, which is a more common practice) to Fannie Mae or Freddie Mac is much easier when information about the homeowner and property is already recorded on the standardized form that these government agencies prefer. That document is Form 1003.

When Do You Fill Out Form 1003?

When you apply for a mortgage, you’ll need to complete Form 1003 two times. The first time will be on your application for the mortgage. After applying for a mortgage, you’ll receive a preapproval letter explaining the maximum amount of money the lender is willing to loan you.

Then, you’ll find a home, make an offer and have that offer accepted. A part of the closing process for buying your new home involves finalizing the terms of your mortgage loan. You’ll need to complete Form 1003 a second time during this step.

Depending on how fast you find a home, a considerable period of time can pass between your initial loan application and the purchase. You fill out the form a second time to capture any updates to your income, assets, liabilities or demographic information. When you fill out Form 1003 a second time, information about the home you’re purchasing is included on the form. The second copy of the form also includes detailed information about your mortgage loan terms. 

What Are the Sections of Form 1003?

A key goal of Form 1003 is to determine your creditworthiness. Lenders use Form 1003 to calculate your debt-to-income ratio. This is a percentage that compares the amount of money you earn to the amount of money you owe creditors. Lenders use it to determine whether you can comfortably afford to buy the home you’re looking at.

To calculate your income, Form 1003 has questions about your employment history. The lender wants to know where you work and how long you’ve worked there. Aside from money earned from work, there are also spaces to list other forms of household income, such as stock dividends or rental income. There’s space to tally your proposed monthly household expenses, including both the mortgage and other expenses like insurance. In the assets and liabilities section, you’ll list out the value of your major assets and monthly payments towards debts. This helps the mortgage company get a better idea of your financial status. 

Once you’ve chosen a home you want to buy, you’ll fill out the section of the form that asks for a detailed legal description of the property. There’s also a section for loan information that notes your loan amount, the type of loan you’re getting, the loan’s interest rate and the length of the loan. Form 1003 captures basic demographic information for everyone included on your loan application, such as your spouse. In addition to the basics like name, address and date of birth, the form also asks for your Social Security numbers. 

One of the final sections of Form 1003 is for declarations. In this section, you answer yes or no questions about your legal and financial standing. Citizenship status and the duty to pay monthly alimony or child support payments are some of the information included in this section. If any of the answers on the declarations section are yes, you need to attach a continuation sheet to your application on which you provide more details about the answer. 

Form 1003 is a standard part of the application process for obtaining a home mortgage loan. In addition to supplying key information about yourself to the mortgage lender, this form is an excellent resource for understanding the exact terms of your loan.