Funds in Bank Statements

Funds In Bank Statements That Cannot Be Used By Lenders

Gustan Cho Associates are mortgage brokers licensed in 48 states

This guide covers funds in bank statements that mortgage lenders cannot use.  All funds in bank statements that are newer than 60 days need to be sourced. All lenders require two months of bank statements from borrowers. In order for lenders to be able to use funds in bank statements, the funds needs to be documented and sourced, says Angie Torres, the National Operations Director at Gustan Cho Associates:

Any cash deposits or irregular deposits that is not sourced or documented cannot be used by borrowers for the down payment or closing costs. Cash is non-existent in the mortgage world.

For mortgage underwriters to consider funds in bank statements as qualified funds for borrowers to use for down payment or closing costs, funds in bank statements need to be qualified, verified funds. To use towards the down payment and closing costs on a home purchase, all deposits in the past 60 days need to be sourced—any irregular deposits over $200 need to be sourced. Borrowers cannot make a large cash deposit and use it as qualified funds if they do not have where it came from. Cash is non-existent in the mortgage world. Regular paychecks deposited every other week are no problem and can easily be sourced. However, if the borrower deposited $2,000 in cash from a side job without documentation, it cannot be used as qualified funds. Another example is when borrowers deposit large checks from a sale of a car or other high-ticket item.

Irregular And Large Deposits

YouTube player

Borrowers can use large irregular deposits if the deposit is documented. For example, borrowers can sell a high ticket item such as a car, jet ski, boat, motor home, or motorcycle but the paper and money trail needs to be documented. The large deposit can be used if the borrower can provide the following:

  • copy of a bill of sale
  • copy of title
  • copy of the check
  • deposit slip
  • updated bank statements after the deposit

A cash sale receipt is not acceptable and cannot be used as documented and sourced funds in bank statements.

What If I Have Large Amounts Of Deposits Not Sourced

Many folks have large amounts of cash in a safe deposit box, often called mattress money. Borrowers who need to use undocumented cash for a down payment on a home purchase need to source that cash. Borrowers need to deposit the cash in the bank account. They need to show the funds in bank statements for at least 60 days to be able to use that cash towards a home purchase. Any cash deposits that have been deposited for longer than 60 days it does not need to be documented because underwriters only need 60 days’ bank statements. Mortgage lenders only ask for 60 days of bank statements, so any deposits older than 60 days will not matter.

Earnest Money Needs To Be Sourced Funds In Bank Statements

Homebuyers write the sellers an earnest money check and ensure the earnest money check can be sourced. Earnest money is only credited towards a down payment if it can be sourced. Some folks get cash. They then get a money order and give the money order as an earnest money deposit. Unfortunately, the underwriter will want to see where the earnest money came from. Since it was unsourced cash, the earnest money check cannot be used as qualified funds. Home buyers giving earnest money to the seller or seller’s realtor should be given a personal check. Mortgage underwriters will want copies of canceled checks and 60 days of bank statements of the account holder of the checking account.

Funds In Bank Statements For Gift Funds

Many times when the funds in bank statements cannot be sourced, the only alternative will be for borrowers to get gift funds from a family member or relative. To use gift funds, the donor needs to sign a gift letter. The gift letter form is provided by the lender. The gift letter states that the funds are gift funds only and gift funds cannot be repaid. Gift funds are solely a gift and not a loan. The donor needs to provide 30 days of funds in bank statements. Donor’s bank statements must show gift funds have been seasoned for at least 30 days. The donor must provide proof of funds leaving the donor’s bank account and being wired or deposited in the recipient’s bank accounts.

Qualifying For a Mortgage With Lender With No Overlays

What do the means in the bank statements for gift funds mean?Gustan Cho Associates Mortgage Group has no overlays on government and conventional loans. Borrowers who need to qualify for a mortgage with a lender with no mortgage lender overlays on FHA, VA, USDA, and Conventional Loans, please get in touch with us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *