Many buyers in our market have to “scrape” up the cash needed to buy a house and when they do this, money is pulled from multiple sources: 401k/retirement accounts, gift money from relatives, personal loans, cash advances from credit cards, etc… Money coming from multiple sources is okay, BUT, you must make sure your money is coming from a source that’s acceptable to your lender. So, which ones are acceptable? The most common acceptable sources of money are gift funds from a family member or borrowing from a 401k/retirement account. In contrast, getting a cash advance on your credit card and/or a personal loan are normally unacceptable sources of money because they will increase your monthly debt payments, which could possibly affect how much you could get approved for.
How will the lenders even find out where your money came from? All lenders require you to source all the funds you’re going to use for your down payment or closing costs. ANY deposits you make into ANY of your accounts must be verified and sourced. If you cannot provide this, then the lender will not allow you to use those funds for the down payment or closing costs. Does this mean you can’t use the cash you have saved that’s not in a bank account?? No, not necessarily, you should deposit all the cash you’re planning on using for your home purchase into a bank account at least 3-4 months before you start thinking about buying a home-this is called “Seasoning” your funds.
Conclusion: Make sure your down-payment and closing cost monies come from a verifiable and acceptable source. Do not deposit any monies into any of your accounts that can’t be verified. Overall, before doing anything with your finances, consult your mortgage loan officer first; he/she will guide you in the right direction!
