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Down Payments Will Come Under Strict Scrutiny—and the Less Down Payment You Have, the More Scrutiny You Will Receive.

If you are like most people and are inclined to put some money into a home in the form of a down payment, lenders care where you get it from. As mentioned earlier, it has to be yours. At least, it has to be yours in the form of a gift or a grant. There are some acceptable sources for down payments and some that are not acceptable.


Your savings account

Your checking account

Any publicly traded stocks you own


Mutual funds

Equity in other property

Retirement accounts, including 40i(k)s and IRAs Sale of appraisable assets

Savings and checking accounts are easily verifiable. You'll need to provide only three months' most recent bank statements. Why three? Good question, but three statements will typically be enough to show your regular income along with regular deposits. It shows you putting your paycheck into the bank twice a month or transferring monies to a savings account.

Publicly traded stocks can be used. Some loan programs require that you not only prove ownership of the stocks by showing a minimum of three months' ownership, but also cash those stocks in and deposit the proceeds in your bank account. Most programs have shied away from this requirement and simply want to verify that you own those stocks, they're yours, and it's safe to assume that they're where your money is coming from.

Several years ago, conventional lending required that you cash in the stocks, deposit the proceeds, and provide a copy of the deposit receipt. Now, however, verification of ownership along with an acceptable valuation of the stock being used is acceptable.

Of course, bonds and mutual funds are treated in much the same way. You'll need to show that you have access to bond funds. Have those bonds matured, or what is the current value of those funds should you decide to tap into them? Mutual funds will also be verified by three months' most recent statements.

Equity in other property means that you sold another house to buy a new one. In this case, be prepared to not only provide bank statements, but also have a copy of the signed settlement statement from your previous sale.

Most retirement funds allow owners to borrow from those funds or use them to buy a home. Verification of ownership and the terms and conditions for how those funds may be accessed to buy a home will have to be reviewed by an underwriter.

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