Cash on deposit

The primary source of documented liquid assets for most applicants is the applicant's bank account balances. The typical processing requirements are copies of at least two months of the applicant's bank statements. This should be the most recent two months.

Undeposited cash or "mattress money" will not be acceptable with conforming programs, primarily because those funds may be borrowed (which increases debt) or unreported income (which is illegal). Applicants with substantial undeposited cash should deposit those funds immediately. Unfortunately, that applicant may have to wait at least three months before applying for a conforming residential loan.

If the applicant cannot provide bank statements, he or she can request a printout from the bank teller. Otherwise, the loan processor will have to send a verification letter to the bank to verify the current and average balance for the borrower's accounts.

As the processor reviews these bank statements, he or she will confirm the account ownership but will focus on two elements:

  1. Current balance. This amount is normally what the applicant can use for qualification.
  2. Average balance. The account's average over the past two to three months will tell the processor whether the borrower has made any large deposits during the past months. Any unusual, large deposits must be explained and documented, because lenders are primarily worried those deposits may have come from unacceptable sources.

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