When you have the money to buy a home the lenders will want to know where the money came from. This is partly to protect against fraud and this information also helps the lender to determine your qualification as a borrower.

Its important to document the funds from your savings accounts, this will make the lender more confident in you as a borrower. A history of savings shows a level of stability.

If you can verify other funds which you are not using for your down payment, funds which you have put by for a rainy day, then this will illustrate you are a low risk borrower.

Its very important to document any funds used for your down payment and other closing costs. The following sections can offer you help with verifying and documenting your down payment and its source.
 

When buying a home, it is not enough to just "come up" with the money. With the exception of "no asset verification" loans, lenders want to verify where the money comes from. This is partially a quality control feature to protect against fraud, and partially an underwriting tool to determine your qualifications as a borrower. 

If you can document the funds come from your personal savings, the lender is more confident of your strength as a borrower.  A savings history indicates a level of stability.

In addition, if you can verify you have additional assets that are not needed for the down payment, it is important to document those, too. Additional assets are "reserves" you can draw upon during times of trouble, such as unemployment, medical emergencies, and similar occurrences. Additional assets can also help to document that you have a history of saving money, which makes you a more dependable borrower.

It is extremely important to completely document the paper trail of any funds you use for down payment and closing costs. The sections that follow offer guidance on both verifying assets and documenting them as a source of your down payment.

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The easiest way to document funds in your checking and savings accounts  to provide your lender with copies of your most recent bank statements. Most lenders will ask for two or three months bank statements. 

If for some reason statements are not available lenders may  send a "Verification of Deposit" to your bank in order to determine your current bank balances and average balance for the last two months.

If your balance has been at a constant level over the verifying period you're fine. Your lender will view this as "seasoned funds". If however there are large deposits shown on your statement, you might be asked to document and explain the source.

Some borrowers need help with the down payment, especially when buying a first home. It is perfectly acceptable to accept assistance from family members such as parents, grand parents, brothers and sisters, aunts and uncles. Gifts from other sources are normally not acceptable.

If you receive assistance from a family member it needs to be in the form of a "gift". Normally you are not allowed to borrow money to pay for your down payment.

Your lender will provide you with a form called a "gift letter". This will state the relationships between the parties and other information associated with the purchase of the property. The important point to remember is that the gift letter clearly states that the funds are a gift and are not required to be repaid, the letter is then signed by both parties.

In addition, most lenders will want the donor to provide evidence that they are financially able to make the gift. This evidence may take the form of a bank statement or stock statement.

You should be sure to maintain a paper trail of all transactions associated with the gift including a copy of the check.

Normally you are not allowed to borrow funds for the down payment of your house. The exception to this is when a loan is secured by another asset that you own or have equity in. As an example, if you are planning to rent your present house you can take out an equity loan against it. You can also hedge an uncertain housing market by taking an equity loan on your present house which allow you to make a "non-contingent" offer, giving you a more favorable  status as a potential buyer.

So as long as your loan is secured against another asset such a car or stock you will be able to use those funds for a down payment.