Your Bank Balance Is Not the Whole Story: Ann and the Large Deposit Rule
Everyone says the only thing a lender cares about is how much money is in your account. That is wrong. The guideline also cares about how it got there, and the story of a buyer named Ann shows why that matters.
Meet Ann
Ann is a fictional buyer near Summerville. She is an illustration of a situation that comes up often, not a real client. She has been saving for her down payment in a depository account, and one large deposit is sitting in it. Ann assumes the balance speaks for itself. She plans to send her statements and wait.
That plan has a gap. A lender looking at Ann's file is not only reading the total. The lender is also reading the activity that built the total.
What the conventional guideline says
For a conventional loan, the guideline is Selling Guide B3-4.2-01, Depository Accounts. Here is the text exactly as written:
"The lender must verify funds in checking, savings, and money market accounts using two months of bank statements. Large deposits exceeding 50% of qualifying income must be documented."
There are two parts to that. First, the lender verifies funds using two months of bank statements. Second, a large deposit, one exceeding 50% of qualifying income, must be documented. The second part is the one that catches people off guard, because it turns a simple balance check into a question about the source of the money.
Why this matters for Ann
If Ann sends her statements without thinking about the large deposit, the lender will see it and ask about it. That request lands in the middle of the file, when Ann is already juggling the rest of the process. She then has to track down paperwork on a deadline.
Ann does not have to do it that way. The rule is public. Once she knows it, the large deposit becomes a task she can handle early instead of a surprise condition she handles late.
The question Ann asks
Here is what I would tell any buyer in Ann's position to say to their loan officer:
"Before I send my two months of statements, can you tell me which deposits are large enough under the large deposit rule that you'll need documented, so I can get that paperwork to you now?"
That one question does a few things. It shows you understand the rule. It gets the loan officer to look at your accounts with you. And it lets you gather the right paperwork before anyone has to chase you for it.
What Ann brings
After asking the question, Ann does three things:
1. She requests the full two months of statements for every account, not only the one holding most of her down payment.
2. She makes sure she has all pages of each statement, so nothing is missing.
3. She pulls the document showing the source of any large deposit.
The guideline is about documentation, so the strongest thing a buyer can do is hand over documentation. Your lender may have additional requirements of its own, which is another reason to ask the question before you send anything.
The takeaway
A balance tells a lender where you are. The statements and the source documents tell the lender how you got there. Under the conventional guideline, both matter.
If you are planning a conventional loan and you have a recent large deposit in a checking, savings, or money market account, do not wait for the request. Ask which deposits need documenting, collect your two months of statements for every account, and pull the source document for each large deposit.
If you want help sorting through your own accounts, call me at 843-LOW-RATE or visit homeloansinc.com. I find the path.
Home Loans Inc - Jason Sharon, Mortgage Broker. Company NMLS #1728740, Jason Sharon NMLS #1281448. Equal Housing Opportunity.
Learn more about this loan program: Your Bank Balance Is Not the Whole Story
