Definition of Large Deposits

I heard the current definition of Large Bank Deposits that guides u/w is "exceeding 25% of the qualifying monthly income of the borrower". Is this correct?

3 Answers

Not sure there is an exact standard. I have seen various underwriters ask for verification on varying amounts, some as low as $100 or so, and every underwriter I have ever dealt with requires verification on deposits near 25% of monthly income.

Sorry to say this is one of the instances where there is no 'SET STANDARD' as it will depend on the Underwriter and Loan Program. Common sense rules generally apply-if it looks out of place-you'll likely need to document the deposit. Good Luck!!

The whole profile of the borrower must be examined to determine what is considered a large and/or unusual deposit.

Satisfactory explanation and source documentation must be provided for large deposits or recently opened accounts, regardless if funds were needed for closing.

If the loan is being sold to Fannie the below requirements are needed..

When bank statements (typically covering the most recent two months) are used, the lender must obtain the borrower’s written explanation and documentation of the source of funds for large deposits, which are defined as a single* deposit that exceeds 25% of the total monthly qualifying income for the loan.

Although a large deposit is defined as a single deposit that exceeds 25% of the total monthly qualifying income, a series of small deposits that add up to a significant amount may be of concern and require additional research or documentation to ensure the source of funds was not from a new debt being obtained. This is of course all up to the Underwriter.