Different Methods of Down Payment Verification

If you want to buy a home, then you have to make a down payment for it.  But you have to verify where you got the money for the down payment.  So you need to produce documentary proof to meet the verification requirements of the lender.  

Down payment verification is part of the process of home buying.  You can not simply produce money without showing where you got the funds.  You must comply with the verification process because it is part of the rules and regulations of home buying.  

However, verification may not be needed if you are taking a zero asset loan program.  This type of loan program is offered by some lenders but few people can acquire it.  If you qualify for this type of loan, then a down payment is usually not needed to purchase a home. 

For most situations, down payment verification is required.  So here are the different financial sources that you can use to fund the down payment and the proper documentations needed for each.  

Savings and Checking Accounts 

Some home buyers have considerable money stashed in savings and checking accounts.  This may not be a good investment option but verifying the down payment coming from a savings account is simpler and faster.  

The funds should be in the account for at least three months. You will be asked to produce bank statements and proof of previous deposit.  

Funds from Stocks, Bonds, and Other Financial Products 

If you have money invested in stocks, bonds, and other investment options, then the lender may require you to produce the monthly statements from the broker.  You may also be asked to produce a copy of the stock certificate.  Your tax forms are also required because the earnings from the investments are reflected on your tax returns.

Personal Cash Gift 

If you receive money from a relative to make the down payment, it can be considered as a gift fund.  The lender will require you and the giver to sign a gift letter.  The signed gift letter is the primary documentation needed by the lender.  Proof of familial relationship may also be asked from you.  The giver should also produce documentations showing the source of the cash gift.  

Retirement Accounts 

You can borrow money from your 401k to pay for the down payment.  The verification process for this source of fund is simpler.  All you need to do is to produce the basic documents of the account and account statements.  

Funds from Property Sales 

You can sell some of your assets to pay for the down payment.  You can sell personal jewelleries, your car, or any other personal asset.  The transaction and the proceeds of the sale should be well documented.  Your mortgage lender will ask for copies of the paper work.  This will be used to verify the funds used for your down payment.  

The process of verifying your down payment for your home is not complicated.  As long as you have the right documents, you will be able to meet this requirement without problems.  Just make sure that you understand the process and the required documents needed by the lender.  

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