When applying for a mortgage loan it is important to understand why underwriters ask certain questions. One of the most popular questions is “why do you care where a get the money for my down payment and closing cost”?
First understand that when supplying bank statements for a mortgage loan, only the past 60 days worth of statements are required. There are a few things an underwriter looks at when they are looking at your bank statements. The one in question are the deposits. Depending on the type of mortgage loan you are applying for (Conventional, FHA, etc.) will dictate how funds can be accumulated in an account per that loans guidelines.
With conventional loans the borrower has to provide proof that they have seasoned funds (funds in an account 60 days or longer) for the minimum down payment of 5% of the sales price. The statements must show proof the funds were saved by the borrower and not a result of a loan or gift. For FHA loans the 3.5% down payment can be a gift from a family member or close friend.
So, the first reason an underwriter ask for proof of a deposit is to determine that the down payment was accumulated correctly according to mortgage loan’s guidelines. The second reason is to make sure the funds deposited in the account did not come from a new loan or credit card advance that was not reflected on the credit report. Therefore not having the correct monthly debt payments reported in the debt to income ratio, which in turn could affect that amount of loan a borrower can qualify for.
So, to answer the initial question. Underwriters have to prove that the funds accumulated in the bank account did not come from a source that is not allowed by the subject mortgage guidelines. The only way to prove that is show where the funds actually came from.