Mortgage Asset Verification: What Lenders Check

Introduction

Lenders verify your assets to ensure you have funds for the down payment, closing costs, and reserves. Asset verification typically involves reviewing bank statements and sometimes investment or retirement account statements. Lenders also want to know the source of large deposits.

What Lenders Look At

• Checking and savings — 2 months of statements; source of down payment and closing costs
• Investment accounts — If used for down payment or reserves
• Retirement accounts — If used; some lenders allow a percentage of vested balance
• Gift funds — Gift letter and donor's ability to give

Large Deposits

Lenders may question deposits that are not from your regular paycheck. They want to ensure the money is not a loan (which would add debt). You may need to provide a letter of explanation and documentation—for example, a copy of a check from a gift, or a sale agreement for an asset.

Reserves

Reserves are liquid assets you have after closing. Lenders may require 2–24 months of PITI in reserves, depending on the loan type and your profile. Reserves show you can make payments if your income is temporarily disrupted.

Frequently Asked Questions

What assets do lenders verify?

Lenders verify the accounts you use for your down payment and closing costs, plus reserves (extra savings). This typically includes checking, savings, and sometimes investment or retirement accounts.

How far back do bank statements need to go?

Most lenders request 2 months of bank statements. They want to see the source of funds and that balances are consistent. Large or unusual deposits may require a letter of explanation.

What is a large deposit?

A large deposit is typically any deposit that is not from your regular paycheck or a recurring source. Lenders may ask for a letter of explanation and documentation (e.g., sale of asset, gift letter) to verify the source.

Can I use gift funds for my down payment?

Yes, in many cases. You will need a gift letter stating the amount, that it is a gift (not a loan), and the donor's relationship to you. The donor may need to provide bank statements showing the funds.