27 Years of Professional Creative Real Estate Financing in Florida and Michigan


Pamela J. Gordon, President

941.758.0600 office   248.770.7066 mobile/text


Income, Assets and Debt Ratios

       for Mortgage Loans

Verifying Your Down Payment, Closing Costs, Assets, Income and Debt

Before a lender is willing to give you funds for mortgage loans to purchase or refinance a home they have to be sure that not only you qualify for the loan, but the sources of your income, assets and debt are verified.  There are specific methods that are acceptable for verification and everything must have a traceable paper trail attached to it.                                                                                          

​Down Payment & Closing Costs  
         Documenting that the down payment comes from your own funds and that you will have savings and/or assets left over as reserves after making the down payment, gives the lender confidence in your strength as a borrower and your ability to repay the loan.  However, the down payment does not always have to come from your own funds and you do not always need reserves after the closing of the loan.Take extra care to document the sources for any monies to be used for the down payment and closing costs.  There will need to be a paper trail for any large deposits made into your accounts in the last 60 days.  

Acceptable Down Payment & Closing Costs Sources

​​Cash in a bank account- this needs to "seasoned" money in an account in your name.  That means the money has been in the account for at least 60 days.  If it has been deposited in the account more recently, there needs to be documentation showing where the money came from.  "Mattress" money is not allowed, which is why it needs to be deposited into the account in plenty of time. 

Mutual funds / stocks / IRA / 401(K)-again these need to have your name on the account and be seasoned.  The funds also will need to be transferred into a checking, savings or money market account prior to underwriting approval to be counted as funds for the down payment and closing costs.  

​Proceeds from the sale of another property-prior to the closing of the sale of the other property, we will need to see the purchase agreement and all addendums.  If they property sale has already closed, the underwriter will want to see the Settlement Statement from the sale and proof that the funds were deposited into a bank account in your name.

​Gift from an immediate relative-this will require a gift letter from your relative stating that the funds are being given to you as a gift that does not need to be repaid.  Sometimes the underwriter will require proof that the funds have been received and deposited into your bank account, also.  If the funds were received more than 60 before the underwriting process begin
s, they will be seasoned funds and not considered gift funds.


It is always good to show that you will hav
e assets after the closing of your home purchase or refinance.  These need to be verified with 1-2 months of statements, with all pages included.  Even if these are funds that are not being used for the transaction, they are often required, depending on other factors of the loan and your strength as a borrower.

                        Common Assets Considered in a Mortgage Loan Application

  • ​Checking accounts, Savings accounts, Money Market accounts
  • Stocks, bonds, mutual funds, 401(K) and retirement accounts
  • Life insurance with a cash balance
  • Other real estate or property that has equity in the current value

Income and Employment

A mortgage loan is based on your ability to repay the loan, not just on the value of the property or your assets.  Verification of your income is a necessity in the current mortgage market.  There are many ways that this is done, depending on your source of income. 

  • If you are a salaried employee, it is usually verified with a month of paystubs and 2 years of W-2's. 
  • If you are a commissioned employee or self-employed, you will probably need to show 2 years of complete Federal tax returns. 
  • If your income is from rental properties that will require tax returns as well.
  • If you are retired and your income is from social security and/or tax returns, we will need the award letters from those (stating that the pensions are either life time or will continue for at least 3 more years) and either check stubs or bank statements showing direct deposits. 
  • If your income is from interest and dividends from investments, the underwriter will need to see that there is an amount being sent to you from those accounts every month that is the same, in order to count that money as income. 
  • If your income is from annuity payments, we will have to show the paperwork that it will continue for at least 3 years and proof of the amount you are receiving. The same is true for Child Support and Alimony payments.  We must show the divorce payments that state that the payments will continue for at least 3 years and verify that they have been paid on time and are up to date.


The underwriter will want to review a list of all your current debts. This along with your credit report will provide the lender with a snapshot of your obligations. The lender will want to confirm that you will not be overextended when the mortgage payment is added to your current debt load.  If there are inquiries on your credit report, they will want a statement as to whether those have resulted in any new debt, and if so, the details of that debt.