An overview of what you will need to provide to us if you are using the proceeds from a previous sale for your down payment.
Proceeds from the sale of any property, vehicle, or other large item (anything worth more than 50% of your monthly income) will require special documentation. As long as you can prove where the money is from, this should not be a problem for
Do I need to do this?
Are you planning on using assets that came from a large sale within the last 2 months? A large sale might be a car, house, or anything greater than 50% of your monthly income. If yes, please make sure you have all of the following documentation. If you recently sold an asset but you do not need the money from the sale for closing costs, you do not need to document the sale.
What do we need?
If you sold a property:
- Final, signed Closing Disclosure for the sale (the lender will use this to check the amount you were paid)
- Your bank statement showing the money entering your account
If you sold a car:
- Bill of sale, signed
- Proof that you previously owned the car (this can be a copy of the title or copy of your car insurance with your name on)
Why do we need this?
Any deposit over 50% of your monthly income is flagged by our lenders and needs to be “sourced” due to anti-money laundering guidelines. It is very common that borrowers make a large sale in order to finance their new mortgage, but that sale must be documented if you need to use it to qualify. See Large Deposits for more info.
The lender may also be concerned about any extra debt you have taken on recently, since the payments for this debt can affect your qualification. Since a large deposit in your bank account could be an indicator of new debt, the lender may just ask for an explanation of the money. The lender is required by Fannie Mae to include written documentation of the rationale for use of the funds within the loan file.