Downpayment saved? Fantastic!! What you need to know for your mortgage approval.
May 26 2015 Posted by
You've got your downpayment and you're ready to go. Congratulations! Soon you'll need to verify that downpayment for your mortgage approval. It's required by all lenders to protect against fraud and to prove that you are not borrowing your downpayment, which changes your lending ratios and potential approval. Here's how to prepare:
- Provide a 3 month history of any bank account(s) where you have been accumulating funds for your downpayment. Online account statements are acceptable as long as they show your name linked to the account.
- If you had any large deposits, show the source i.e. if you sold your car, show a copy of the bill of sale. If you transferred money in from another account, show the records for that account too.
- If all or part of your downpayment will be a gift, a gift letter must be signed. Your broker can provide you with the lender's standard gift letter. A bank statement showing the funds deposited into your account will be required. Gifted funds are only acceptable from immediate family members (parents, grandparents, siblings).
- If using RRSP money, provide a 3 month history of the account. If you are withdrawing under the Homebuyer's Plan, the funds must have been in the account for 90 days.
- If money for downpayment funds is coming from outside the country, the funds must be in a Canadian bank 30 days before funding. You must also have a 90 day history from the account outside of the country.
- Regularly deposit all cash in the bank, don't stockpile at home.
- If your downpayment is coming from the sale of your current home, provide an accepted contract of purchase and sale and your current mortgage statement.
- You'll also need to verify that you have an additional 1.5% of the purchase price to cover closing costs.
If you have any questions, please give me a call!