How you use your money make affect your mortgage options

If you want a mortgage you need to be prepared financially and have all your ample documentation set up and ready to go. One such thing you need to be aware of is using cash. Here’s how to best support your cash when using down payment monies and or reserves to purchase a home….

First things first when you’re buying a house you need to be able to have cash, credit, and income. One of the things which are integral to getting a mortgage is having verifiable cash. It’s realistic when you purchase a primary home you need to go to have a down payment as little as 3% down on a conventional mortgage.

Other options exist including 5% down for conventional financing and FHA 3.5% down financing. The down payment money can typically be your own funds from a validated bank account. Cryptocurrency may return some strong yields but is not an eligible bank account. The money must be in a legitimate bona fide bank account, 401k, stocks, bonds, CDs, mutual funds any kind of a traditional institutionalized bank account is acceptable. If the money is in one of those accounts the money is considered eligible.

Primary Home transactions also allow for the use of gift funds. Once again these monies must be documented and sourced and signed gift letters from the donors are required to count this money as eligible. Money sitting at home in a safe will not work, money sitting at home in grandma’s safe will not work. Most mortgage companies typically require two months of bank statements for funds to close.

So for a vacation property gift money is not allowable. 10% is the magic down payment percentage to buy a second home or vacation property. Granted you’ll have to have enough income to offset both the housing payment you presently have if you have one as well as the vacation property payment as well. Vacation homes also sometimes required reserves dependant on the debt-to-income ratio and credit score.

Rental property transactions do not allow for gift money at all and specifically require several months of payments in the bank what are known as reserves as mentioned above.  So know this when using money to buy a house don’t have the money sitting at home in a safe, don’t have the money in cryptocurrency. If your money is in one of these sources doesn’t mean you can’t qualify it just means the transaction may take a little longer as time passes to have 60 days bank statements.

Looking to get a mortgage? Get a no-cost mortgage!

 

 

RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

Side-by-side comparison of FHA and conventional loans with highlights of key differences, including PMI and down payments

FHA Loan vs. Conventional Loan: Which Is Best for Your Home Purchase?

Deciding between an FHA loan and a conventional loan for your home purchase is an…

Image of a modern house with a document titled 'Refinance Agreement' and a split keychain symbolizing a divorce settlement. The scene includes subtle financial elements like a calculator and pen, emphasizing the mortgage refinancing process

How to Structure a Divorce Buyout as a Limited Cash-Out Refinance with Fannie Mae

Divorce is already an emotional and challenging process, and figuring out how to handle property…

A vibrant depiction of the Sonoma County real estate market, showcasing modern single-family homes surrounded by vineyards and rolling hills under a clear blue sky, symbolizing opportunities with the 2025 conforming loan limits increase.

2025 Conforming Loan Limits Rise: Boosting Opportunities for Sonoma County Homebuyers and Sellers

2025 Conforming Loan Limits: What It Means for Sonoma County Buyers and Sellers The Federal…

Graph showing mortgage rate trends over time with a highlighted target strike rate, accompanied by a calculator and pen, symbolizing refinancing decisions

How to Decide Your Strike Rate for Refinancing: A Guide to Market Improvements and Timing

When it comes to refinancing your mortgage, knowing your strike rate—the interest rate at which…

View More from The Mortgage Files:

begin your mortgage journey with sonoma county mortgages

Let us make your mortgage experience easy. Trust our expertise to get you your best mortgage rate. Click below to start turning your home dreams into reality today!