Can You Use Cash For a House Deposit?
Is a Cash Deposit Bad When Purchasing a Home?
This is really about the Seasoning of Funds for the deposit. Seasoning of Funds means the time of which the money has been in your possession in your bank account.
Cash isn’t necessarily bad when buying a home, but it can make things a lot more difficult when not dealt with properly. It comes to a documentation of the cash.
If you are planning on using mattress money to buy a new home, then it’s best to start planning before you find a place to buy. If you can start depositing the money in bank accounts before it will save you a lot of hassle. Speak with your mortgage banker as you start the process for some best practices.
A mortgage lender will not be able to verify cash, however they will need an explanation as to where it came from. The rule of thumb is that any cash deposits that are over half of a person’s normal pay will be flagged for needed explanation.
A mortgage lender will ask for bank statements for the two prior months. If the cash is already in the account and has been “seasoned” then no questions will be asked.
Companies like Venmo are turning out to be a huge benefit to this process as people become more used to electronic transfers over cash payments to friends, family members and vendors.