Banks ask about deposits even non payroll deposits $500 or up

When is a deposit considered a “Large” deposit?

 

 

A single deposit or multiple deposits over the period of time covered by the bank statements reviewed by the underwriter that, in aggregate, results in a large deposit.

 

            Single Deposits

            Single Deposits that represent more than 25% of the total qualifying monthly income of the loan

ü  If the bank account is joint with another borrower, review single deposits that exceed 25% of the tota

       qualifying monthly income for the loan

ü  If joint borrowers have separate account(s) then review single deposits that exceed 25% of the individual borrower’s total qualifying monthly income for the loan

 

Multiple Deposits

Multiple aggregated deposits that represent more than 25% of the total qualifying monthly income for the loan for the period covered on the bank statement.

ü  If the bank account is joint with another borrower review multiple deposits that exceed 25% of the total qualifying monthly income for the loan.

ü  If joint borrowers have separate account(s) then review multiple deposits that exceed 25% of the individual borrower’s total qualifying total qualifying monthly income for the loan

 

Note:   Self-employed borrower’s gross income is the monthly qualifying income used for the self-employed borrower

 

Necessary Documentation for Large Deposits

 

·          A satisfactory signed letter of explanation from the applicant is required in all circumstances regardless if funds are needed for closing and are determined to be from an acceptable source

·          If the funds in question are being used for down payment, closing cost, earnest money deposit, or reserves, additional supporting documentation is required in order to adequately verify the source of the funds, must be an acceptable source.

·          A letter of explanation is not required if the funds are transferring from one account to another (i.e.. checking to savings, money market to savings or checking, etc) AND both sides of the transfer(s) are tracked on the bank statement(s) in file

·          If a checking, savings, or certificate of deposit (CD) account was opened within 90 days of the loan application date, has a large deposit, or the current account balance is significantly greater than the previously shown balance, include documentation of the source of the funds indicating that they are from an acceptable source

·          Account balances that are greater than the average balance over the previous two months must be addressed to ensure funds are from an acceptable source

·          Large deposits may need to be sourced for up to six months, if multiple account statements are in file

·          IF funds in question are not being used for down payment, closing costs, earnest money deposit or reserves, and due diligence has been performed to ensure the funds are not from an unacceptable source, the underwriter may deduct the large deposit from the balance of the account and allow remaining funds to be used for qualifying. If the asset balance is reduced by the amount of the deposit, the reason for the change in the asset amount must be documented, AUS must be updated with adjusted asset balance and rerun to update the decision

 

 

Examples of an unacceptable Source:

·         Personal Unsecured loan

·         Cash on hand

·         Credit Card advances