The Seasoning Rule: Why Timing Matters
One key concept in mortgage lending is fund seasoning.
Lenders typically review your most recent 90 days, or three full bank statement cycles. If your down payment funds have been in your account longer than 90 days, they are considered seasoned. In most cases, no additional explanation is required.
If a large deposit appears within that 90-day window, the funds are considered unseasoned. This simply means the lender will ask for documentation to confirm where the money came from.
Common Down Payment Sources
When funds are not yet seasoned, lenders may request supporting documents depending on the source:
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Employment bonuses or commissions must be earned income and clearly deposited into your account.
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Monetary gifts must come from an acceptable donor and be confirmed as non-repayable.
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Inheritance funds must be legally distributed and deposited before they can be used.
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Sale of personal assets, such as a vehicle or investments, must be supported with proof of sale and deposit.
Why Lenders Verify the Source of Funds
Lenders verify down payment funds for two main reasons.
First, financial institutions are required to confirm that funds come from legitimate sources.
Second, lenders must ensure the money is not a loan that needs to be repaid. If repayment is expected, it counts as debt and can affect how much you qualify to borrow.
As a general guideline, any single deposit that represents a large portion of your monthly income may be flagged for explanation. Planning ahead helps avoid last-minute delays.
You are not limited to savings alone when building a down payment. Bonuses, inheritance, and family gifts can all be used, but timing and documentation matter. Being upfront and prepared early can make the mortgage process smoother and far less stressful.