Do I Have to Prove I Have Down Payment Saved Before Closing?

Lenders typically cover their bases to protect their investments.

Lenders Usually Want Proof

Lenders take on risk when they invest money in a loan to a homeowner. They first want proof that you have funds. They also might need to confirm that you did not borrow the funds or acquire them illegally. This helps the lender feel confident in the loan. On occasion, sellers may ask for proof as well following an offer.

Documentation Can Be Simple

Providing proof of down payment is simplest if you have personal checking and savings accounts that have had stable balances for some time. Significant deposits may prompt the bank to require sourcing, like gifting statements if gifted. This is to confirm that you have not borrowed the down payment. Joint accounts would need proof that you have full funds access. Other retirement or long-term deposit accounts may be used but often involve an early withdrawal penalty.

Bottom Line

Most banks do require proof of down payment for a conventional loan. Realize that this is for mutual benefit to ensure you are investing wisely in your home. If you have solid funds to use for down payment, providing proof of that should not alarm you. The bank wants to offer you a loan as long as it is confident in the investment.

References

• FSBO: Down Payment Financing For a Home Purchase
• Catherine Fogarty: Mortgage Requirements: Proof of Down Payment and Closing Costs