Moderator Emeritus
Posts: 7,225
Registered: ‎09-16-2011
Re: DoI qualify for a mortgage?

The $4000 can be used as long as the funds are "seasoned" funds.


The first requirement for cash-to-close is that the funds be “seasoned” for at least 60 days.  In other words, the lender wants to make sure you aren’t obtaining cash from somewhere on a short-term basis simply to meet the cash-to-close requirements of the loan.  To verify that you have “seasoned” funds, you’ll be asked to provide bank statements covering the last 60 days for all accounts you intend to use for your cash-to-close.


If you’re pulling cash out of an account that has some restrictions on withdrawals (such as 401ks, IRAs, etc.), you may be asked to provide the terms of withdrawal in writing as well.  Since you are wanting to use cash that is in a safe, you need to deposit that cash and let it "season" before you can use those funds to close with.


One of the headaches that arises from bank statements is that the underwriter will likely require you to “source” any unidentified large deposits. Underwriters are concerned about such deposits because they want to make sure you aren’t pulling cash out of an unknown debt account that isn’t included in your debt-to-income ratio. Be prepared to provide cancelled checks or bank statements sourcing the deposits. If the deposits are transfers from another bank account, be prepared to provide the last two months of statements for that account and source any unidentified large deposits on those statements as well.


Unexpected things often come up in the loan process, including low appraisals, property taxes coming due, etc., so it’s not always possible to anticipate cash-to-close issues ahead of time. However, if you’re going to be purchasing a home or refinancing and paying down the loan balance as part of the transaction, a little planning ahead can make the sourcing and seasoning part of your transaction much easier.


If you’re going to be coming in with cash at closing, I highly recommend pulling together the bank statements and sourcing documentation ahead of time so you’re not scrambling at the last minute before closing.


If you were to deposit the funds on February 15, then you wouldn't be able to use those funds, unless you have at least two of your monthly bank statements showing that the funds have been sitting in there.

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