June 4th, 2014
You may know a home loan requires a down payment and that the amount depends on the loan program you choose.
You may not know all down payments must be properly sourced.
What does that mean?
- If the money is a gift, you need a letter from the person stating as such and that you don't need to repay the amount. You also need to show a copy of the check.
- If the down payment comes from your bank account, a lender needs to make sure you have the money through bank statements. For more, check out this article on my website: 8 Documents You Need to be Pre-Approved for a Loan.
- If the funds are proceeds from the sale of a property, a lender will need a copy of the HUD settlement statement that shows the transaction.
- If the money comes from a retirement fund, you need to provide the terms and conditions for borrowing against the retirement funds, so the lender can verify if any repayment is required.