Asked by aajohnsonceo  |  Submitted January 17, 2016

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?

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  Answers  |  3

January 18, 2016

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.

$commenter.renderDisplayableName() | 09.20.17 @ 18:45

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January 19, 2016

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.

$commenter.renderDisplayableName() | 09.20.17 @ 18:45

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January 19, 2016

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.

$commenter.renderDisplayableName() | 09.20.17 @ 18:45

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