When securing a mortgage, down-payment verification will be required. The lender needs to know that you have the funds available to close on your mortgage. Lenders look for the following when reviewing your down-payment verification:
- What is the account balance?
- Do you own the account, can they connect your name to the account number?
- Is the balance sufficient to cover your down-payment. Sometimes they want to see funds for closing costs as well.
- Have you accumulated the funds gradually from your own employment income. If they see any large deposits from sources other then your employment, they will questions where it came from. For example if you transfer funds from another account, they will then ask you for history from that other account.
- 3 months history from your account
So where is your down-payment coming from?
- SAVINGS: a lender will want statements from the account proving that the funds have been accumulated over three months
- RRSP/TFSA/INVESTMENT: you will be required to show 3 month statements from the account that shows any deposits within the last 90 days.
- PROCEEDS FROM A PROPERTY SALE: provide a copy of the final sale agreement and a recent mortgage statement showing your current mortgage balance
- GIFT FROM FAMILY: provide a snapshot or statement from your bank account showing the funds deposited into your account. You will also need to get a gift letter signed by the donor, we will provide you with a gift letter form that needs to be completed
- BORROWED FUND FROM A LINE OF CREDIT: you need a copy of the line of credit statement showing the funds being withdrawn along with a snapshot/statement from your bank account showing the funds available in your account
***NOTE*** Your deposit on offer goes towards your down-payment. To prove this deposit, provide a deposit receipt (given to you by your realtor), plus statement(s) showing the deposit funds being withdrawn from your bank account.
This may sound easy but it can get tricky!! Here are a few tips to keep it clean and easy:
- Do not move around money from one account to another until you have satisfied your verification of down-payment condition.
- Your bank or financial statements must always show your name, account number and dates. Often times we receive online bank account printouts showing the transaction history but the clients name is not displayed anywhere. In this case, we will need something that proves you own this account like a void cheque or an older bank statement.
- Gifted down payments must be from a parent, sibling or grandparent. Otherwise the money may be considered borrowed funds and cause an issue for qualifying.
- Do not BLACK OUT or block information on your documents. Lenders will think you are hiding something from them.
- Make sure documents are not locked or password protected.
Here is an example of a Bank Statement: Click Link
Here is an example of a complete Verification of down-payment: Click Link
Here is an example of a Gift Letter: Click Link
If you have any questions or feedback, feel free to reach out anytime!
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Locations: 42 Ontario St, Grimsby, ON. L3M 3H1 | 300-1100 Burloak Dr, Burlington, ON. L7L 6B2