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Underwriting process and bank statements

I'm in the process of purchasing my first home with a preapproved no money down VA loan. I am being gifted with $10,000 and my only other asset is a $5,000 401K. I'm concerned that my bank statements may set me back. I have been living with my mom for the past year and have saved no money because I've been spending my paychecks on "leisure" and paying bills off. Currently my DTI is only 14% (adding the mortgage, it will be 35%) and I haven't overdrawn my account, although the blanace has gotten pretty low ($.98 one pay period). My mid credit score is 690. Will all this affect my ability to qualify for a loan? When I was renting, I was never late, so I know that I can take on a mortgage. But I'm just not sure the lender will agree.
  • September 27 2013 - US
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Answers (3)

They are mainly going to look at the ending balance of the last statement for the funds to close to verify you have liquid funds.  It will not matter what previous balances are.  Any deposits that are non payroll deposits or over 25% of monthly income will need to be paper trailed.  It is not that hard of a process when you have a good loan officer that will review all the information and answer all the questions the underwriter might have before it is submitted to underwriting.  Good luck.
  • September 27 2013
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Profile picture for Arizona Mortgage Pro
Good morning and thank you for your service!

I don't foresee any issues with the assets on your loan as long as you source your gift funds. What I mean by source is that you will need to provide a signed gift letter for the $10,000 from the family member that gave it you and some bank statements from the donor's account. You can find examples of gift letters online or just contact me and I can help you get an idea of what needs to be included. 

Other than that, everything should be pretty standard, credit and income appear to be in line. 

Best of luck with the new home purchase and feel free to come back here if you have more questions.
  • September 27 2013
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Not often do I completely (albeit, respectfully) completely disagree with fellow lenders; however, this time I think the mark has been totally missed.  Your bank statements notwithstanding, any underwriter worth their salt will be evaluating ability to repay and manage money successfully.  And, any time there is more than a 25% increase in housing expense the underwriter is going to look to explanations.  In your case:  0 Rent = 100% payment shock.  And, with no savings, inquiring minds are going to want to know.

That is not to say you will not get an approval...it is just saying the issue should be addressed.  Letters of explanation (paid off car, debts, helped Mom, etc.).  Submitting without some sort of explanation is a sure fire way to run aground with underwriting.

All my best,

Deborah
NMLS #275125
WJ Bradley

"We Listen.  We Care.  We Deliver."

  • October 01 2013
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