Large deposits appear on bank statements (PART 1)

When you are in the process of applying for home loans, some of you were asked to provide an explanation for large deposits that show up on your bank statements. I know it seems ridiculous. Banks should be happy that you have money in your bank account right? Why would we care if you have large deposits??? Here is the reason why. Banks are worried that you borrow money from someone else in order to do the loan. For example, if you are buying a house and you are short fund to close, banks worry that you might borrow money from credit card cash advancement or you might be borrowing a small loan from another lender in order to come up with the cash. Since all home loans qualify you with certain debt to income ratio, that means your total amount of “debt” might increase due to this fund borrowed. In turn, it will change your ability to qualify for the loan. (TO BE CONTINUE…)

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P.S. Due to limited spacing for questions on this post, please post your questions on Q&A page instead. Thank you

119 thoughts on “Large deposits appear on bank statements (PART 1)

  1. Cathy on

    I have just received my commitment letter. I am the only one on the mortgae. My husband is not. When I ran out of checks and got cashier checks for both the application fee and the realtor deposit. My husband gifted me some funds for these transactions. He does not have checks and when he cashes his paychecks he gives me cash. I have provided the mortgage company with a letter stating the gift as well as a copy of the cashiers check and a copy of his paystub. Is this going to be acceptable to the underwriter?

    • Underwriter on

      Cathy, I’ve got a feeling that you might run into problem with sourcing this gift fund. The biggest problem here is that the underwriter will not be able to proof the cash you received was from this paycheck. Does the amount given to you match with his net pay on this paycheck? Let me know what the underwriter says.

      • Cathy on

        The amount of his netpay was $1106. And he gave me $500 which was half of the deposit and $465 for the application fees. Both amounts came out of his paycheck.

        • Underwriter on

          I understand, but without being able to provide paper trail to proof that cash used was from this check, you might run into problem with sourcing fund. Nevertheless, don’t say anything to underwriting until they request that to be sourced. They might not ask. Who knows? 🙂