What Mortgage Lenders Do and Don’t Want to See on a Bank Statement

Lenders use your bank accounts to determine your liquidity and stability. They want to assure themselves that you can afford the mortgage.

Mortgage lenders will look for red flags in your bank statements before approving a mortgage. jason cox/Shutterstock

Mortgage lenders tend to look at two months’ worth of bank statements when you apply for a mortgage. They want to know if you can afford down payments, closing costs, and future mortgage payments. Some items they look for include income, account stability, and expenses.

But they also look for red flags. There are items you want your lender to see, and there are others that can torpedo your loan. Here are a few of both.

What Do Mortgage Lenders Want to See?

There’s a lot of paperwork that goes into applying for a mortgage. And one of the items that mortgage lenders require is your bank statements. Depending on the underwriter, your bank statement can be pivotal in your qualifying for a loan. But what do lenders want to see?

Income

Mortgage lenders want to verify your income to ensure you can make the monthly payments. They also want to know whether you have enough funds for a down payment.

The mortgage lender may ask for proof of deposit. That means they must know that the funds needed for the purchase are in your bank account and accessible to them.

For example, if you’re asking for $300,000 to purchase a home and need a 20 percent down payment, you should have $60,000 in your bank account.

The lender will also want to ensure you have additional funds for appraisal fees, taxes, title searches, title insurance, and deed-recording fees.

Proof of deposit lets the mortgage lender know that you can pay the associated expenses of a new home.

Reserve Funds

Depending on the underwriter, they might want to see a few months’ worth of mortgage payments in reserve funds.

The lender wants to know if you can handle payments if you have a financial setback, like a job loss or sickness.

Closing Cost Funds

The lender wants to ensure you have enough funds to cover the closing costs. Closing costs usually range between 3 percent and 6 percent of the total loan cost, according to Rocket Mortgage.

Besides closing costs, they want to know that your liquidity is enough to finalize the loan, meaning you can easily access the necessary funds.

Sourced Assets

Your mortgage lender wants to know that your assets are sourced and seasoned.

Sourced means that the lender knows where the money is coming from. Seasoned means it has been in your account for a while.

What Don’t Mortgage Lenders Want to See?

There’s a flip side to what mortgage lenders want, and that’s what they don’t want. Depending on the underwriter, they could dig deep into your bank statements. There are several red flags that could put the brakes on your loan.

Unstable Income

Mortgage lenders want to ensure you have consistent money coming in so you can make mortgage payments on time. They look for regular sources of income.

Self-employed individuals with fluctuating income must show a regular balance to assure the mortgage lender of stable income.

Large Influx of Cash

It makes mortgage lenders nervous to see large chunks of cash suddenly appear in a bank account. It makes them wonder if you’ve taken on a loan for the down payment that’s not showing up on the credit report.

Ensure you have documentation that explains where the money is coming from. For example, if your grandparents gifted you a large amount of money for your wedding, ask them for a copy of the transfer slip or their bank account statement. This will prove where the funds came from.

Your grandparents should also give you a gift letter stating that it doesn’t need to be repaid.

If you can’t explain or prove where the money came from and it isn’t “seasoned” (in your account for several months or years), then the lender will suspect money laundering or fraud. This will put the brakes on the loan and might even open you up to criminal investigation.

Overdrafts

When you spend money that isn’t in your account, it triggers an overdraft. Most banks have overdraft fees. Two or more overdrafts will trigger a red flag for mortgage lenders.

That’s because regular overdrafts may be deemed as your overestimating how much money you have. It may show that you tend to borrow more than you can afford.

Be prepared to explain overdrafts.

Bank Statements for the Self-Employed

If you’re self-employed, your bank statements can be a little tricky. The mortgage lender will want to review bank statements over a longer period than two months. They’ll analyze your cash flow.

They’ll also want to see that you keep your business and personal accounts separate.

Be Vigilant With Your Bank Accounts

Ensure your bank account statements are clean and you’re not bouncing checks. If you’re gifted money for a loan, ensure that the source is documented so you can offer an explanation.

Lenders use your bank accounts to determine your liquidity and stability. They want to assure themselves that you can afford the mortgage.

The Epoch Times copyright © 2025. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.