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What do mortgage lenders look for on bank statements?

When applying for a mortgage, you’ll be asked to provide documentation proving employment, bank accounts, property information, tax returns and proof of supplemental income. Bank statements and other documents are how mortgage lenders like Guild assess your financial situation to determine loan eligibility. It’s helpful to understand what we’re looking for on bank statements so you’re prepared if questions come up during the underwriting process.

Do I need to show bank statements for a mortgage?

Because they’re an up-to-date record of your financial transactions, you may need to show recent bank statements as part of your mortgage application. It will be based on your individual situation.

Why do mortgage companies look at bank statements?

It helps to be prepared and understand why mortgage companies look at bank statements and what transactions may raise questions. Before applying for a loan, we recommend reviewing your recent bank statements and asking yourself these six questions. If potential issues come up, you may need to explain what you’ve done to address them.

  1. Do I have enough money for a down payment? A down payment is a portion of your home purchase price that you pay up front, typically on closing day. Guild uses bank statements to verify if you have enough funds in your account to cover your down payment.
  2. Did I receive a gift? Depending on the type of mortgage loan, all or a portion of your down payment funds can be gifted. However, you’ll need to document the gift with a gift letter, as well as proof of receipt. Your bank statement is one way to show that someone transferred money for a down payment gift to your account.
  3. Was there recently a large deposit in my account? If you have a recent sizable deposit, you may need to explain where the funds came from and why you’ve received them. You may also need to document the source of the deposit. Also, Guild Mortgage underwriters will be looking for any undisclosed debt payments that aren’t on your credit report. You can avoid potential issues by disclosing all debt on your loan application.
  4. Are there regular deposits coming in each month? Guild mortgage underwriters will analyze if payroll deposits are coming in regularly and if the deposit amount is sufficient to cover monthly mortgage payments. Regular deposits are also a way to confirm job stability. Irregular deposits over a certain amount or a lack of deposits may require explanation.
  5. Can I cover closing costs? Besides your down payment, you’ll also need to leave plenty of room in your account to cover costs incurred during the closing process.
  6. Are there overdrafts? If your bank account goes negative multiple times for nonsufficient funds, it can show an inability to manage your finances and raise a red flag.

How far back do mortgage lenders look at bank statements?

Generally, mortgage lenders require the last 60 days of bank statements.

To learn more about the documentation required to apply for a home loan, contact a loan officer today.

The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.

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About the Author: Guild Mortgage

Founded in 1960 when the modern U.S. mortgage industry was just forming, Guild Mortgage Company is a nationally recognized independent mortgage lender providing residential mortgage products and local in-house origination and servicing. Guild’s collaborative culture and commitment to diversity and inclusion enable it to deliver a personalized experience for each customer. With more than 4,000 employees and over 250 retail branches, Guild has relationships with credit unions, community banks, and other financial institutions and services loans in 49 states and the District of Columbia. Guild’s highly trained loan professionals are experienced in government-sponsored programs such as FHA, VA, USDA, down payment assistance programs and other specialized loan programs. Guild Mortgage Company is a wholly owned subsidiary of Guild Holdings Company, whose shares of Class A common stock trade on the New York Stock Exchange under the symbol GHLD.