What You Didn’t Know About Down Payment Checks

Did You know that we don’t always need a bank statement to confirm the source of the earnest money deposit ( EMD)? It’s true!!

We will accept a canceled check to confirm the EMD cleared the Borrowers account or an escrow letter from the Holder of the EMD funds. As part of the mortgage process, the borrower must always show proof that they had given a down payment check and that check had cleared their account, making sure that the borrower actually gave the down payment check.

A bank statement or other source of the EMD is REQUIRED when determining the minimum contribution from the Borrower’s own funds such as when purchasing a secondary residence.

Examples of when the minimum Borrower contribution are below:

• Second home over 80% LTV
• Minimum 5% of Borrower’s own funds when gift funds are involved.

Summary:

Primary purchase transactions DO NOT require a bank statement to source the EMD. A cancelled check will suffice or if the Underwriter sees something triggers further documentation.