Down Payment Requirements For Purchasing or Refinancing:

Do not deposit cash:

Now that you are pre-approved, its important that we share some key rules on your down payment money when it comes time to getting your loan.  The number 1 challenge that can cause delays is sourcing the down payment.  This is a very important process when getting your loan approved by the underwriter.

The bank (Fannie Mae & Freddie Mac) wants a guarantee that the money being used in the purchase or refinance is your money (Borrowers own funds). 

Part of your needs list is to provide the last 2 months of your Bank Statements.  The down payment must be in your account for at least 2 months.  If there are any deposits in the bank statements for the last 2 months we must provide documentation on what those deposits are and verify that the deposits are your funds.  If any of the deposits were cash deposits the bank will NOT be able to use those funds for the loan.  If the borrower is needing the cash deposits to qualify the bank will NOT approve the loan.  

Here are acceptable forms of Down Payment Money:

1. Sale of a Car or other vehicle (Do not Accept Cash)
   • When using money from the sale of a vehicle we need these items:
     1. Copy of the Bill of Sale
     2. Copy of the Cashiers Check or Check
        • DO NOT ACCEPT CASH FOR THE CAR
2. Gift from a Family Member (Gift can not be from a friend and can not be Cash)
   • When receiving a Gift we will need the below items:
     1. Signed Gift letter from all parties Involved (We will provide letter)
     2. Receipt of gift (Copy of Check)
     3. Bank Statement or Print out from the Giftor showing that they had the ability to gift the money.  AKA they had the money already available to give.
     4. Bank Statement from the Borrower showing the funds were deposited into their account. 
3. 401k Loan or 401k Withdrawal.  
   • When using your 401k for down payment money we will need these items below
     1. Copy of the 401k Statement prior to the withdrawal
     2. Copy of the 401k Check or if it was direct deposited into account we will need the bank statement showing the deposit
     3. Bank Statement or Print out from account showing 401k deposit (Make sure the print out shows the account number on it)
     4. Terms of withdrawal
        • The terms of withdrawal will show the underwriter if the money was a loan or if it was a normal withdrawal.  If the withdrawal is a loan we will need to add the payment to the debt ratio
4. If cash is deposited into account:
   • If there are cash deposits in the account that can not be avoided and borrower will need the cash deposit to use for the down payment we will need to wait at least 2 months (2 full bank statements) before we can use the money from the deposit.
     1. If the cash deposit does not need to be used we can subtract the cash deposit from the total balance in the account and use this for the money we need to close.

The sooner we can verify the down payment the sooner we will be able to close your loan successfully.  Borrowers sometimes tent to move money around before they purchase thinking it will help that all the money is in one place.  In fact this can cause delays because we then need to go to each bank statement where the money came from and verify those funds. (No big cash deposits).  These rules apply to all of the follower loans:  FHA Purchase Loan, USDA Loan, VA Home Loan, Conventional Mortgages, FHA Streamline refinancing, USDA