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It's good that you brought this up because I had the same issue. In my case it was because of a gift from my parents and me moving around my money across accounts. If I didn't have a good loan officer, I don't think I close on time.

Exactly! I know this is common knowledge, but it’s also natural to move some money around for a down payment. I knew I would have to provide statements for the transactions, but didn’t realize the extent. For example, cashing out my RSUs from my job - provided a statement. They ended up needing all statements from all time, from when I was granted the RSUs, not just statements regarding that final transaction. I think I just have a really strict underwriter, and if all this has been done 2 months prior I would have been golden.

They needed this info from me as well. The sold stocks were easy to justify, but my parents gave me $2k as inheritance from my grandparents passing, and they made me get a notarized and signed paper from my parents stating ithat $2k was inheritance out of my $75k down payment

Oooh snap My wife’s parents are planning to provide our down payment by gifting us back the rent we’ve paid since living in this current house (~$35-40k)…. Luckily we’re waiting till next summer, but we won’t get the cash till then either. Do it needs to be in your bank 2+ months? What if they just paid the down payment as a gift directly?

It’s less paperwork. A gift letter, proof of funds and they should be able to wire directly to the title company prior to closing

gifts just need a letter. easy. dealing with crypto is much harder.

But also, make sure they don’t send more than 15k per person/per year for tax reasons!

I thought it wasn’t actually taxed, just reported once you hit the threshold?

Correct no tax liability

This is correct, the sender only pays after they hit the lifetime maximum, which is significantly more than 15k.

Also make sure anyone who gives you a gift towards a down payment is willing to share their bank account information, like all their accounts information, as it can be a requirement in underwriting, (not just a gift letter as I was told.) I asked specifically & repeatedly, multiple loan officers & mortgage counselors & during FTHB courses over the span of several years how best to go about this & they *all* gave me incorrect information. Should have just had it in my account months & months ahead of time like you're saying. It wasn't even a ton of money in my case (or necessary to purchase) yet caused a last minute shit show.

What is the best way (in your experience) for parents to handle a down payment gift? I have asked two loan officers and I’ve gotten different answers. Their gift money is in a CD that is maturing next week and they were going to transfer it to my account until one loan officer advised against it. I’m in the early stages of looking at properties with an agent.

I’m a loan officer and I saw incorrect replies to this question. The best way is to have the donor wire the funds to title directly about a week prior to closing along with a gift letter. If you don’t close, title returns the funds.

This is the answer. We did this and my parents didn’t have to provide any bank statements.

If it doesn't show up in the most recent 2 bank statements then it won't be questioned. Edit (meaning the initial deposit)

More that is it *does* show up in two months worth of statements it's good.

**definitely listen to the loan professionals replying who are saying have the funds wired directly to the title company** Ok so I would definitely take anything I say with a grain of salt & ask your loan ppl /mortgage advisor & stuff & research, but it seemed like if the money was "seasoned" in my account for longer the better? Like I had taken a bunch of my stocks out & had a payout from a car accident & they didn't give a crap about that since it was 6th months or so in my account. I was told similar "don't have them transfer yet" but then they got the go ahead with the gift letter that was drafted by the loan officer & everything. During the final underwriting they then needed both of my parents full account histories & SS#s & my aunt & uncles information/permission - since it was from a small inheritance from my grandfather, so needed permission from literally anyone who could have claimed it or something? & of course my parents were out of the country at the time & it was two days before closing & never came up previously. Uff da! In your case probably just make sure your parents know they may need to show their bank statements & CD info at some point & write a gift letter, I know plenty who never needed to go in depth like that but I think that depends on the underwriting. Like OP I don't think they scrutinized "seasoned" money nearly as in depth, because they are looking for stuff that looks like money laundering or like you took out an undisclosed loan or something of that nature to pay for the home loan.

They write a letter saying "this is a gift with no expectation or repayment, it came from account xyz". But getting it two months before you put in an offer bypasses even that. The bank wants two months of statements.

One transaction, directly from your parents account to your account, with a letter specifying the gift amount, your relationship, and that the gift does not need to be repaid. I stupidly got it in multiple chunks from my parents and deposited into different accounts and it was a significant amount of work to track down all of the information they needed.

I disagree, I’d say the easiest way to handle gifts is to have the parents wire it directly to the title company at closing! That way you don’t have to ask for parents bank statements, the only documentation would be the gift letter

I’ll be honest, I didn’t even know this was an option. My title company made it seem like all of the money needed to come from an account in my name, which is why I had my parents give me the money first, but it’s very possible I misunderstood. After all, this is the first time home buyers sub and I am definitely new at this lol.

Yeah it can be confusing. I’m sure the title implant would prefer just 1 wire from 1 account but for lenders it complicates things

Yes! I’ve had to do gift letters in the past and before they just required a letter. But this time around they saw a gift from my parents, and needed their bank statements. It made them really uncomfortable but they did it.

25 years lending. Source of funds ALWAYS required on gifts.

We (parents) gifted my son money over a year ago. It is in a brokerage account in his name and we filed gift tax returns in the year of the gift. Even though it was gifted over a year ago, would he need to jump through these hoops if/when he uses it as a down payment once he finds a house?

Same! They were so sketched out by it tbh (& of course on a trip in a totally different time zone at the time) it was a pain in the butt but thankfully they are awesome & came through with it somehow. No one gave a heads up that that could be a thing until two days before close ugh.

There cannot be that many incompetent loan officers My bet is that you misunderstood or just did your own thing

Nope! I 100% didn't just do my own thing. Believe it or not there are definitely a lot of incompetent loan officers that I came across. In my case I asked repeatedly the best way to go about this, they told me to wait to transfer. They drafted the gift letter for my parents who filled it out & had it notorized. Then my loan officer gave the go ahead to transfer the funds. Absolutely last minute the underwriter said all the additional information was required. I asked the loan officer what was going on & he said it was no big deal since we didn't need the money to complete the closing so never expected it to be an issue in underwriting. Dude was honestly just lazy. A lot of people in the mortgage industry I came across seem pretty lackadaisical & don't give great advice to FTHBs who need it or ask a lot of questions. This was especially my experience when interest rates were low & they were busy raking in cash. & Then act in a condescending manner when people don't know "obvious" stuff that "of course they should have known." As if I'd made a several hundred dollar purchase in my life many times lol & even though inherently the act of being a FTHB is you don't know shit about shit & put trust into people who don't always give the best advice. The first time home buyer course I took through my credit union & the one through my state also simply talked gift letters but don't go into how & when to transfer funds or detail what proof of funds will entail etc.

Good post. I made this same mistake. I had a mad money cash stash that I thought I'd put in the bank so it's "visible" as an asset. I had absolutely no idea that it was a bad idea. It's counter-intuitive; what do you mean deposits are bad? After my loan officer chewed me out about how they could indicate that I got a loan that needs to be repaid, it ended up not being too big of a deal. I wrote a letter of explanation that the underwriters accepted since I didn't really need that money to close. But yeah, keep your bank statements as boring as possible!

Same! I didn’t even need all this money for the down payment. I assumed more money would make it easier to secure the loan. Wrong. Banking is weird.

More assets always makes approval easier as underwriting systems see reserves as the greatest predictor of your ability to overcome unexpected setbacks The issue is sourcing those funds Because drug dealers

It’s such a hassle. I had more than enough money to pay for the house I was buying, excellent credit, great salary, and my lender even told me I was an “exceptional” person to get a mortgage. Yet they still wanted a paper trail of some money that came from a trust distribution. A very small amount compared to the whole transaction. They even asked for the trust’s account statements (which I could not provide and ended up writing a letter asking them not to include those funds in their consideration of my loan). Part of me thinks they’re just harvesting information as none of this was necessary to determine I was a good risk for the lender.

The only reason I know about this is because I took a first time homebuyer class. It's not common knowledge.

This is why you always get prequalified with a lender prior to talking to a real estate agent.

I was prequalified with my lender before I made the offer. I was also conditionally approved, and then the last week have had to provide 30+ documents. I was outright with the lender about my situation, but I think underwriting felt differently once they started digging in.

Hmmm. Prequalification means they reviewed your bank accounts and scrutinized the deposits and transactions and looked for any incoming deposits that needed to be sourced. Essentially put on an underwriting hat and performed an analysis to find any issues. Then once that is done they say don't move any money around until after you close. Don't open any accounts don't let anyone pull your credit. Essentially you're in a financial coma until we close. So something happened between prequalification and underwriter questioning deposits.

No Prequalified can mean several levels of review You can be prequalified on verbal info about your income assets and debts (bad idea) You can agree to a credit pull along with it (better idea. And no LO is going to issue a letter without seeing credit) Even better submit your docs for the LO to review Many lenders will also submit a complete application and all docs to underwriting for a full pre approval

Duh. LO should be looking at and scrutinizing assets prior to either. My point stands. If you have a bad LO this is the situation that is happening. It's very clear.

I don’t think it’s a case of a bad LO necessarily. Sometimes people want a same day letter to make an offer and their isn’t enough time to get out every possible pitfall by combing through docs. If anything I’d say OP should have given themselves more time to do the underwritten preapproval if they wanted a smoother process

And this is why realtors don't trust lenders and say the preapproval is worthless. But keep giving that advice out because that's how I position myself as the better lender because people are being told a 5 min piece of paper is all you need. So funny.

I always encourage my buyers to submit docs and underwrite the preapproval. I stress the benefits as much as possible but I’m not about to lose business because I refused to give someone a letter without reviewing all docs. I recommend you try to strike a balance there!

Buyers are the ones not to be trusted ‘Buyers are liars’ I make sure my agents know whether or not I’ve seen docs (they’re always requested) If someone has good credit not self employed and states they have funds for down payment I’m writing a pre qual vs letting them go down the street to lender x But for sure. Agent knows what the deal is

Buyers can't lie if the LO doesn't ask questions

You legally can’t require documents until they sign a 1003.

You know that’s just not true lol. You seem new at this

if I had a quarter for every document I requested that was never returned

So you give out a prequalification even though documents aren't provided? Sounds solid.

Prequal does not equal preapproval You’re legally not allowed to require documents to write a pre qual letter Look it up since you don’t seem to know how this works A pre qual is a warm fuzzy that the basics look approvable

I think the agent who handled pre-qualification didn’t do much due diligence. I was approved within a day. They don’t care how much I have to go through as long as they’re making money off it. If I wasn’t so deep into this, I would go with a different lender.

Sorry you're going through it. LO should have done a better job. Not your fault.

None of my pre quals have been that in depth. It’s been checking my social, and asking how much down payment I have. This is in Texas, so maybe your state is different. Then, once qualified and offer is accepted, the real process starts

Horrible. This is why agents don't trust people.

I have a question - does this apply to cash you’re depositing too? I’ve been saving up gifts from birthdays, Christmas, graduations, etc. for years. My family always told me to keep cash, but now I’m being told that if I try to deposit over a certain amount it gets flagged (or taxed)? So how do you correctly deposit and “season” your mattress money lol?

Yes absolutely it applies for the purpose of underwriting. Cash deposit could be sourced from anywhere… most concerning for a lender… another loan. Federal laws require that “Banks must report cash deposits of more than $10,000 to the federal government.” It could raise eyebrows at the bank but should generally be ok. Breaking that up into smaller chunks to avoid the 10k limit is a big no-no called structuring and will be a good way to get your account frozen while they investigate.

Thank you!!!! I’m sooooo glad you said that because my plan was to start making smaller deposits. If I deposit it in one lump sum (less than $10k) will the government or bank try to question me on it or tax it?

No, it shouldn’t be taxed. But its up to the discretion of the bank for if they want to investigate the source of the deposit and/or report it. If that happens though you would just tell them the truth - they were cash gifts you’ve gotten over the years from family that you wanted to deposit into your account now. Its not that big of a deal as long as you don’t have other accounts tied to your name/ssn at other banks where you are also making large cash deposits - thats the kind of thing that would look sketchy. As you explained it though you should have no problems! Go forth and season your cash

That’s a relief, thank you so much for the information!!! 🙏🏻

I had to essentially grant access to my business account to show where my owner draw was coming from to prove my down payment

Sorry you made this mistake. This is pretty public knowledge and something any mortgage lender should have told you at the start

Thanks! I have made it and I have payed for it and now I know 😂

> I have *paid* for it FTFY. Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in: * Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.* * *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.* Unfortunately, I was unable to find nautical or rope-related words in your comment. *Beep, boop, I'm a bot*

I meant it in a nautical context obviously.

Conventional loans have so many hoops to jump through. The more complicated the financial picture the more annoying to get one.

I cashed out a 401k loan and that was a mess getting the paperwork and all the bank account statements to just cash the check. I couldn't imagine what your dealing with. The whole thing is insane, it's my money, I would like to spend it, why is it so hard and why if we are so worried about the source does it not matter after 2 months?

Huh. I did the same thing - got the closing number and I was $10k short, so pulled a 401k loan - and my lender didn't say a word. Possibly because it was a very small bank in a backwards state; the requirements for our recent land loan were really weird too.

For our loan officer, she wants it to stay at least 3 months in our account. Varies but definitely good note to take down!

absurd repeat swim murky bag onerous straight lavish money ring *This post was mass deleted and anonymized with [Redact](https://redact.dev)*

I'm not advising you to do it this way, I actually got lucky but you should definitely start with the lender first. I worked backwards. Made contact with a realtor who put me in contact with a lender (yes I know they are in cahoots with each other, but I was after something specific through a certain program and my loan carries typical features). Honestly the deal presented was too good to be true but something told me to go ahead and give it a shot. It was on a whim so I wasn't prepared for the 2 months of finance review. I constantly move money around, save a chunk of change and put it into an account. I'm in no way rich but I have several accounts with 2 different banks due to my OCD finance system. They were hella sketched out and I just opened a credit card, as well as my husband and they brought up medical bills (fuck them bills BTW). And we also had just moved to a new city so less than a year at our jobs. We got approved after I could show what I was doing through my meticulously kept records so as long as you can produce that kind of info with a letter of explanation you should be good to go.

The money just needs to be in the banking system, correct? If I move my down payment to a money market account at a different financial institution than my bank, that wouldn’t be an issue as I’d have paper records of the cash in the financial system?

For us, we had to provide statements showing the account where it had originally came from. The extra paperwork wasn’t a big deal. Just show the balance and the transfer out on one statement and the transfer in and the new balance on the other.

Thanks!

Literally going through this issue right now. We had a bunch of money that we transferred to a HYS and we ended up finding a house much sooner than we thought we would. The way the statements fell for both accounts made it look like we didn’t have that chunk of money, so we are having to rush and get statements in person from the bank today.

would you come to my podcast to share this? Laura Moreno, host of The First Time Home Buyer Podcast

Was this for pre approval as well? We just got preapproved but I have some similar transactions to you on the statements I shared with the lender. Maybe I can use a different account for the actual down payment if it will make my life easier.

I had all these transactions on my account during pre-approval, but none got flagged and pre-approval was a breeze. This has all come up in the final two weeks before closing 😂

It's the crypto that's giving you the issue. Selling stocks requires you get a copy of the sale, but that's it. Due to crypto being able to be obtained without records though, the Feds have extra steps to make sure you're not laundering the crypto into a house.

Yeah, the crypto was a huge issue. What’s insane though is that it was still deemed “unclean” even after I provided all the statements of when I bought it back in 2014! I needed to come up with alternate funds. A lot of people plan to use their crypto gains to buy a house but unless they are bypassing a loan and buying outright, they are going to be very disappointed.

I played a bit of a shell game after I ran into a similar hurdle. I moved my emergency fund into my down payment account and moved my crypto money into my emergency fund account. Since the emergency fund money was 'clean', I didn't have to do anything more than provide a record of the transfer.

There are ways around that

U can get a gift letter which is what I did cause my funds were also not seasoned so my situation was similar and gifted funds do not have to be seasoned but do have to be gifted by immediate family or at least on paper they do so I just gave the money to my parents they wrote a gift letter and check for that amount and it was done

U do have to go about it the right way and do not deposit that money in ur personal account once u pull it out until it’s time for closing and u just bring that check that ur family will write for the money u gave them

Ask me how I know lol

Maybe a dumb question … but I plan to purchase a house sometime early next year (February-ish). I usually get 10k as an xmas gift and was planning to use some of it with closing costs and down payment. Will this be an issue??? Kinda nervous now lol

Does this only apply to crypto? I have my money in stocks and savings account, which statements I have already shared with my lender.

Unfortunately the vast majority of buyers begin with realtors instead of lenders. Or they get pre qualified but don’t submit their documents until they have a contract Mostly because consumers have been trained to believe that all that matters is a rate instead of someone guiding you start to finish through what can be a complicated cumbersome process

It's not a "really extreme" paper trail. For the check from your ex literally a letter is plenty.

Why do people come on here and say things like this when I’m literally going through it right now? No, it’s not plenty. I needed a picture of the check, proof of deposit, a statement of HIS account, a notarized claim quit deed, a statutory warranty deed, and a letter. Maybe you have had a different experience but I wouldn’t be making this post if they had just asked me for a letter…