What is a Sourced Deposit?

The underwriter is requesting you send “source documents” for non-payroll deposits over $100 showing on your bank statements. What exactly does “source documents” means? These documents are the original record of transaction and can be used as evidence that a transaction occurred. You must tell the underwriter in writing along with sending supporting documents or “source” documents for each transaction the underwriter is questioning. You must address each deposit date and amount. Each document should include the name and address of the other party of the transaction, date, the amount, and a description of the transaction.

Examples of source documents include:

  • Cash receipts
  • 401k withdraw letter
  • Cancelled checks
  • Other bank account statements
  • Customer invoices
  • Supplier invoices
  • Purchase orders
  • Time cards
  • Deposit slips
  • Notes for loans
  • Payment stubs for interest

Please keep in mind, cash deposits can be hard to source. The underwriter considers cash saved at home for a rainy day or for your down payment as “mattress money”. They will not accept any explanation for cash that does not have any paper trail. The only way their willing to consider cash deposits sourced are by bank withdraw slips, ATM receipts, bill of sale, etc. Sorry, birthday cards and wedding guess list are not acceptable as sourced documents. The best thing to do is NOT make any cash deposits into your bank account from the time you do an application for the mortgage until you have the keys for your new home in your hands. The underwriter will back out the cash amount not sourced from your total available balance which could jeopardize you not having enough for the closing cost.

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