What Is the 1003 Mortgage Application?
The 1003 mortgage application, also known as the Uniform Residential Loan Application, is the standard form used by nearly all mortgage lenders in the United States. This basic form, or its equivalent, Form 65, is completed by borrowers when they apply for a mortgage loan. While some lenders may use alternative forms or simply accept basic information from the borrower about their finances, the property type, and its value, the vast majority of lenders rely on the 1003 form.
- The 1003 loan application, or Uniform Residential Loan Application, is the standardized form used by most mortgage lenders in the U.S.
- It is required by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. for mortgages they purchase from lenders.
- The application asks questions about the borrower's employment, income, assets, and debts, as well as requiring information about the property.
- Form 1003 is typically completed twice in the mortgage process: once during the initial application and again at closing.
The 1003 Loan Application Form
The 1003 loan application form, also called the Uniform Residential Loan Application, was developed by the Federal National Mortgage Association, or Fannie Mae, as a standardized form for the industry. Fannie Mae and its sibling, the Federal Home Loan Mortgage Corp., or Freddie Mac, are lending enterprises created by the U.S. Congress to maintain liquidity in the mortgage market.
Fannie Mae and Freddie Mac purchase mortgages from individual lenders and either hold the loans in their own portfolios or sell them to other entities as part of a mortgage-backed security (MBS). By selling consumer mortgage debt to these federally backed entities, lenders maintain the liquidity necessary to continue offering new loans.
Mortgages need to be documented in the way prescribed by Fannie Mae and Freddie Mac. Because both require a Form 1003—or its Freddie Mac equivalent, Form 65—for any mortgage they consider for purchase, it is simpler for lenders to use the appropriate form at the outset rather than to try to transfer information from a proprietary form to a 1003 form when it comes time to sell the mortgage.
Generally, borrowers have to fill out a 1003 form twice during a mortgage transaction: once during the initial application and again at closing to confirm the terms of the loan.
What Information Is Needed on the 1003 Form?
The 1003 form is intended to collect all the information a mortgage lender needs to determine whether a potential borrower is worth the risk. While some lenders do not require employment information to consider a new mortgage, the 1003 form calls for at least two years of employment history, including monthly income.
The 1003 form also requires the borrower to note any other household income, as well as provide an itemized list of their assets and liabilities.
A borrower's assets include anything that could be used or liquidated to cover loan payments:
- Life insurance policies
- Checking and savings accounts
- Stocks, bonds, mutual funds, or other investments
- IRA, 401(k), or similar retirement accounts
Lenders also need to be made aware of any other debts for which the borrower may be liable (in addition to mortgage payments), such as car loans, credit card debt, student loans, or open collection accounts.
If the borrower owns any other property, either as an investment or a second home, the 1003 form requires the disclosure of these assets and any mortgages that are tied to them.
In addition, the 1003 form requests information about the property the borrower wishes to buy with the new mortgage.
1003 Application Example
The 1003 mortgage application, or Uniform Residential Loan Application, was redesigned as of May 31, 2021. It currently consists of nine sections, as follows:
Section 1: Borrower Information. This includes your personal, employment, and income information.
Section 2: Financial Information—Assets and Liabilities. Here you list your savings and investments (including financial institution names and account numbers) as well as any outstanding debts and other financial obligations, such as alimony or child support.
Section 3: Financial Information—Real Estate. This is where you list any other properties you currently own, along with what (if anything) you owe on them.
Section 4: Loan and Property Information. Here you describe the property you are seeking a mortgage for. If it's a rental property, the form asks how much you expect to receive in monthly rent.
Section 5: Declarations. This page asks a series of questions about the property, how you are paying for it, and other aspects of your finances.
Section 6: Acknowledgments and Agreements. This is the page you sign, attesting that the information you've supplied is accurate, and authorizing the lender to do a credit check and other inquiries.
Section 7: Military Service. If you currently serve or previously served in the armed forces of the United States (or had a deceased spouse who did), you would note that here.
Section 8: Demographic Information. This section asks for your ethnicity, race, and gender. Federal law requires that these questions appear on the application, but they are optional for the applicant, and you can indicate that you do not wish to answer.
Section 9: Loan Originator. This is a section that the lender fills in.