02 What you need to know
Why lenders review your bank statements
Your lender has to verify that the money for your down payment, closing costs and reserves is really yours, and that it isn’t a new loan in disguise. Anti-fraud and anti-money-laundering rules also require them to know where funds came from.
What “seasoned” funds means
Seasoned funds are money that has been in your account long enough to show up on your statements, generally at least two full monthly statement periods (about 60 days). For a purchase, Fannie Mae generally asks for statements covering the most recent full two months of account activity when they’re used to verify assets.
Large deposits get questions
On a purchase, Fannie Mae treats any single deposit that’s more than 50% of your total monthly qualifying income as a large deposit. If you need those funds to close, the lender has to document where they came from. If you earn $12,000 a month, a deposit over $6,000 may need a letter of explanation and a paper trail.
Common sources and what they need
- Transfers between your own accounts: statements for both accounts showing the money leaving one and arriving in the other.
- Gift funds: a gift letter and proof of transfer. See using gift money for a down payment.
- Selling an asset like a car: a bill of sale, the title transfer, proof of value, and the deposit.
- Cash: the hardest to use. Cash kept at home generally can’t be used on conventional loans, and FHA’s rules for it are narrow.
Moving money early is about a clean, documented trail. Every source still has to be disclosed to your lender. Never move funds to hide where they came from.
03 Real-world example
Example: moving $100,000 from a brokerage account
Say you sell $100,000 of investments in your brokerage account and transfer it into checking a week before closing. The lender may ask for:
- Your brokerage statement showing you own the account and the funds.
- The sale or redemption confirmation.
- Your checking statement (or a transaction history) showing the $100,000 deposit.
Assumptions: illustrative only. Exact documents depend on the lender, the loan program and the account type.
If that money came from a retirement account, the lender may also need the account’s terms of withdrawal, and taxes or penalties can reduce what you actually receive.
Often you don’t need to move the money at all for underwriting. Lenders can frequently verify the funds directly from your brokerage statement. Some programs count only a percentage of stock or retirement balances unless you sell, so ask before you liquidate. Closing funds may still need to be transferred to escrow on your lender’s schedule.
04 What most people overlook
What buyers overlook about source of funds
- Every page counts. Lenders want complete statements, including blank pages.
- Small transfers add up. Moving money between several accounts creates a trail the lender has to follow for each one.
- Your earnest money deposit also needs to be sourced. Pay it from a documented account.
- Peer-to-peer apps and cash deposits can raise questions. Keep records.
- Timing matters. A deposit two weeks before your application is under review. One that’s been sitting for months generally isn’t.
05 How I’d approach it
How I’d organize your down payment documents
I’d rather spend ten minutes mapping your funds at the start than ten days chasing a deposit before closing.
Before you write an offer, I ask you to list every account you plan to use and where the money in each came from.
Then I review two months of statements and flag any large deposits we’ll need to explain, so we can gather the documents now.
If you plan to move money, receive a gift or sell an asset, I tell you exactly which documents to keep before it happens. And I go over your full cash needs, using down payment vs. closing costs, so you know how much you actually need available.