First Time Buyers – Verifying Your Down Payment

Verifying The Down Payment

The down payment on a home, especially for first time home buyers, is an important part of obtaining a mortgage. From the buyer’s perspective, understanding what documentation the lender needs is essential. To qualify for the mortgage, the lender will want to verify the down payment amount and where the money comes from. This is, in part, a quality control feature to protect against fraud and also an underwriting requirement to determine the buyer qualifications as a borrower.

The lender needs proof, in the form of a bank statement, to show the source of the funds as personal savings rather than a borrowed source. This verification gives the lender confidence regarding the credibility of the borrower and the origin of the down payment. A history of savings indicates a level of stability that demonstrates the credit worthiness of the buyer. In addition, verifying additional assets that are not needed for the down payment provide an extra level of confidence and should be documented as well. Additional assets are “reserves” the buyer can draw upon during times of trouble. Depending on the lender and the buyer’s specific situation the down payment may also be “gifted” from a family member. Proof of the source and confirmation that the funds do not require repayment is required in order to qualify this amount for down payment.

Buying a home for the first time can be stressful. Being prepared with the right documentation for the down payment and closing costs can make the process much easier.


Linda F.

I would never finance a home without a mortgage broker again. It was completely stress free and all I had to do was fill out an application and turn up to sign the papers.

Being a single Mom with my own business, the banks would not finance me. Pauline shopped around to get me the lowest possible rate and options that suited my situation. But the best part of all was that her knowledge and experience was available at no cost to me.