Is it true that the Mortgage Company cannot accept pillow money as a down payment on a house ?

We recently purchased a home and had saved cash to use as the down payment but the mortgage company wouldn't accept cash, they said they needed it in the form of a check and that they needed to know where the money had come from. Is this true?

Asked by aajohnsonceo

3 Answers

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Answered by Chad Freeman, Branch ManagerPRO+ in Bethesda, MD
Hello:

Yes this is true. Lenders are required to show a "paper trail" of money. Fannie Mae, Freddie Mac, and other investors have strict policies on "sourcing & verifying" all funds to close. | 01.18.16 @ 19:11
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$commenter.renderDisplayableName() — {comment} | 12.04.16 @ 08:34
Answered by Greg Fischer, Mortgage Broker in Manchester, NH
Chad is dead on. Cash in any form is nearly impossible to use in buying a house. If you have the time, the answer is to get it deposited in the bank right away then wait three months so that you have two bank statements that don't show the deposit on them. Now that money is "seasoned" so you don't have to show where it came from - it's just your money in the bank. But if you make the deposit now, you'll still be required to show where it came from - and "I had it in cash" isn't an acceptable answer. | 01.19.16 @ 19:18
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$commenter.renderDisplayableName() — {comment} | 12.04.16 @ 08:34
Answered by Hans Bruhner, Mortgage Banker in Sebastopol, CA
Yes, both answers are on the money (bad pun intended). If you are looking at doing something sooner, a gift from a relative or close family friend could come in handy as well. The cash can't count right now but an FHA loan will allow you to use all gift money and sometimes that can happen with conventional loans as well. | 01.19.16 @ 23:05
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$commenter.renderDisplayableName() — {comment} | 12.04.16 @ 08:34
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