5+ Proof of Income Alternatives When You Don’t Have Pay Stubs

Proof of income is necessary for many aspects of life, ranging from renting an apartment and applying for a loan to getting a mortgage and even starting a new job. While pay stubs are commonly used documents for this purpose, there are many proof of income alternatives you can use when getting pay stubs isn’t a possibility.

In this article, we’ll define what proof of income is and explain who needs it. Following that, we’ll provide six of the best and most commonly used alternatives and show you how to decide which one is best for you based on your needs and circumstances.

What Is Proof of Income?

Proof of income is a formal document that demonstrates your ability to pay for goods, services, and debt over a specific period. It’s an economic tool used by various parties to perform risk assessment before making financial decisions.

In addition to validating that you earn a sufficient amount of money, proof of income is also used to verify that you’re receiving income consistently and from a reliable source. Pay stubs are commonly used for this reason, but they are not the only option, especially if you’re not a traditional employee.

While a verbal IOU can work when borrowing from a friend or a family member, financial institutions require more solid proof of income. It needs to be in the form of a paper trail that aligns with their internal risk policies, as well as federal and state lending regulations.

Here are some of the most common instances in which you’ll need income documentation:

• Renting a house or an apartment. Landlords usually want applicants to prove their ability to pay rent by making at least three times the required amount to be accepted.

• Getting a loan or a mortgage. Banks and credit unions use proof of income to calculate a person’s Debt-to-Income (DTI) ratio. This is a key figure they use to determine your eligibility for various types of loans or mortgages.

• Applying for government benefits. Government agencies responsible for managing programs like Medicaid or the Supplemental Nutrition Assistance Program (SNAP) conduct rigorous checks to determine a person’s eligibility.

• Being audited or applying for a job. While some states have already implemented salary history bans to combat pay gaps, in others, employers can still request it to assess your market value. Moreover, the IRS can ask for proof of income to verify your tax liabilities.

Who Needs Proof of Income?

Here are some of the most common groups of individuals who mayneed proof of income:

• Freelancers or self-employed workers. Self-employed professionals, like freelancers and independent contractors, often take owner’s draws instead of having salaries. With no Form W-2 or pay stubs, they rely on other business records to prove their solvency. They often face higher scrutiny from lenders due to the volatility of their income.

• Gig economy workers. Gig economy workers are often technically employed and receive regular payments, but often without formal payroll processing. They also face similar challenges to self-employed professionals, as their income can also fluctuate. That’s why they generally need to provide a longer history of income as proof.

• New employees without recent pay stubs. Workers who have only recently gotten their jobs are in a difficult place. While they are formally employed and on a company’s payroll, they don’t yet have pay stubs or have only one. This is a common issue when moving for work and trying to find a new apartment.

• Cash-based workers. Professionals like servers, barbers, bartenders, and childcare providers often receive the majority of their income in cash, with no paper trail. As a result, they may have to regularly deposit that money into their bank account and report it to ensure it’s not “invisible” to lenders.

• Contractors who are paid irregularly. Many contractors work on a project-by-project basis. While they can make substantial amounts of money every year, they may experience prolonged periods of little to no income, making it difficult to show consistency.

Proof of Income Alternatives: Here’s What You Can Use

There are various alternatives for pay stubs you can use as proof of income, and here are the six most common ones:

#1. Bank Statements

Bank statements are often the first alternative to many lenders and landlords when pay stubs aren’t available. They provide a comprehensive insight into your finances by showing how much money flows in and when, and how it flows out.

For optimal effect, you will need to provide bank statements for the last three to six months, at a minimum. This encompasses a long enough timeframe to emphasize consistency in your income.

Lenders and landlords will primarily look at the deposits into your bank accounts, which should be distinguished from refunds or transfers between accounts. Keep in mind that bank statements won’t be effective if you’re mainly using cash without depositing it into your account.

#2. Tax Returns (Form 1040, Schedule C)

Tax returns are a great alternative when you want to verify income without an employer. Apart from the standard Form 1040, self-employed professionals usually have to show their IRS Schedule C, Profit or Loss from Business.

While bank statements mainly show gross income, tax returns show your take-home pay (after expenses and deductions), which is the figure lenders are generally most interested in. Moreover, tax returns are submitted to the federal government under penalty of perjury, which is a reason mortgage lenders particularly favor them as proof of income.

It’s generally recommended to provide tax returns for the past two years. You should also be ready to provide an explanation if there are any big differences between your gross and net income (e.g., significant business write-offs).

#3. Employer or Income Verification Letter

If you need a way to show proof of income without pay stubs as an employee for a specific reason, you can use an employer or income verification letter. This can happen when you are a recent hire or have a unique payroll arrangement with your employer. If you’re a business owner, you can have this formal document written by a CPA.

The letter needs to contain all the relevant details about your employment, such as your job title, annual salary or hourly rate, a starting date of your employment, and the number of hours you work per week. It must also be signed by a credible person in your company (e.g., a manager) with their contact details included so that the lender can reach out to them for verification.

#4. Offer Letters or Employment Contracts

Offer letters and employment contracts are acceptable proof of income alternatives for those who are employed but haven’t received their first paychecks yet. This commonly happens to professionals who have to relocate for their new job and need to sign a lease before receiving their first pay stub.

To be valid, the letter or contract should be signed by both you and your employer while clearly displaying your annual salary or hourly wage. Keep in mind that this type of document may work for renting an apartment, but if you’re looking for a mortgage, you might need to wait until you’ve received your pay stub.

#5. 1099 Forms

Forms 1099 are commonly used for freelancer income verification. As a self-employed income proof, they are the equivalent of an employee’s Form W-2. Whenever an independent contractor receives more than $600 from a single client in a year, the client is required to issue Form 1099-NEC.

More than that, the clients must also send these documents to the IRS, which gives them additional weight. However, 1099s only prove past income, which means you’ll often need to combine them with additional documentation, such as your bank statements.

#6. Invoices and Payment Records

If you’re billing clients on your own, you can use invoices and payment records as financial verification documents. For instance, you can show your lender copies of your invoices and the corresponding receipts to prove that they were paid.

Still, these documents should be used as secondary proof. They can be effective with landlords and smaller lenders, but large banks and financial institutions will usually ask for documents verified by the government.

How to Choose the Best Proof of Income Alternative

Choosing the best proof of income alternative depends on who’s asking for it and what your current circumstances are. Not all documents carry the same weight, and some are much more effective in particular situations. That’s why the first thing you want to do is match documents to the situation.

Large financial institutions have to follow strict lending laws and regulationswhen it comes to selecting candidates and ensuring compliance. They will almost always ask for government-verified documents, like tax returns (Form 1040) or 1099s.

On the other hand, if you’re interacting with a private landlord, they will likely be more flexible. In that case, you may use less formal income verification documents, like bank statements and verification letters.

Following that, it’s always a good strategy to combine multiple types of proof of income. While a single document can leave room for doubt, providing two or three solidifies your case and proves your financial state.

For example, a freelancer may combine their Forms 1099 with bank statements to show both cash flow and a history of earnings. On the other hand, recent employees can include bank statements with verification letters.

Lastly, you should avoid unverifiable or informal records whenever possible. Screenshots of transactions performed with financial apps are not a good way to show your financial situation, even if they are truthful. They can have the opposite effect, raising suspicions in the other party, so you should at least use an official PDF download as more formal proof.

Create Your Own Proof of Income With Paystub.org

If you’re running your own business, sometimes the easiest way to solve the problem of not having pay stubs is to formally generate one for yourself. So, regardless of whether you’re a freelancer, an independent contractor, or a small business owner, you’re your own employer, giving yourself a salary.

In that case, you can use our pay stub generator to quickly and effortlessly make accurate and professional proof of income. Paystub.org made an intuitive tool that lets you input your gross income and deductions and leverage a built-in calculator to create a document that reflects your actual earnings.

Having clean records can help you not just rent an apartment or get a loan, but also file your taxes with ease when the season comes.

Final Thoughts

Knowing all the proof of income alternatives you can use is essential to help you traverse the housing and lending market. While that process is straightforward for W-2 employees, independent contractors typically have to overcome additional challenges due to not having regular pay stubs.

Fortunately, there are plenty of alternatives for proof of income, even if you’re unemployed, in the process of getting a job, or participating in the gig economy. Remember to match the documents to the situation and always provide more than one type of proof, if you can. That way, you’ll have documentation as solid as any corporate pay stub.

Proof of Income Alternatives FAQs

#1. What can I use if I’m self-employed?

If you are self-employed, you can use Form 1040 with Schedule C, Forms 1099-NEC, and personal or business bank statements. You should have at least 3–6 months of your bank statements, while Forms 1099-NEC will be issued to you by clients who paid you at least $600 in a year.

#2. Can I use an offer letter instead of a pay stub?

Yes, you can use an offer letter instead of a pay stub if you’re a new employee who needs proof of income for rent. The letter should be signed by the employer, clearly detailing your salary and start date. However, mortgage lenders may still wait for your first pay stub.

#3. What if my income is inconsistent?

If your income is inconsistent, you will likely need to provide a longer history of documentation. Lenders may ask for 6–12 months of your bank statements and your tax returns from the last two years. This will give them more data to calculate your average income and assess consistency.

#4. Is proof of income required for taxes?

Proof of income is not required when filing your taxes. You do not need to submit this documentation to the IRS; you only need to report your income. However, you need to keep the proof (e.g., Forms 1099, bank records, invoices) for at least three years for audit purposes.