How Many Months of Bank Statements You Need for a Mortgage

Applying for a mortgage involves several crucial steps, and one of the most important parts of the process is providing financial documentation. Specifically, having the right amount of bank statements on hand is essential. In this article, we will discuss the necessary documentation requirements for bank statements and provide insights into how these requirements vary based on the type of loan and the bank's specific needs.

Standard Requirements for Bank Statements

According to standard mortgage underwriting guidelines and secondary market requirements, the most recent past two months' bank statements are typically required. This is a common practice as it gives lenders a clear and recent snapshot of your financial situation. However, it's important to note that in certain situations with automated underwriting systems, it may only require one month, but this is the exception and not the rule.

Requirements for Different Types of Loans

Depending on the type of loan you are applying for, the bank may have different requirements for your bank statements:

Regular Qualified Loan

If you are applying for a regular qualified loan, you may only need 2 months of bank statements. This type of loan typically involves straightforward and transparent financial documentation.

Bank Statement Loan - Non-Qualified

For a bank statement loan that is considered non-qualified, you may be required to provide 12 or 24 months of bank statements. These types of loans can be very difficult, if not impossible, to find due to the current financial situation caused by the COVID-19 pandemic. Additionally, you may need to put down a larger down payment, potentially over 30%, for these types of loans.

Customary Reporting Practices

Based on my personal experience, banks often start with the last two months at the first application and then require each additional month until the loan is approved and closed. This means that as the application process progresses, you may be asked to provide more recent statements to ensure an accurate representation of your financial stability.

Furthermore, banks may also ask for explanations in writing about any unusual transactions that appear in your statements. This can include large sums of money or transfers to or from unfamiliar accounts. It's important to be prepared to explain any such transactions, as they may raise concerns or require additional scrutiny.

Down Payment Proof Requirements

For down payment proof, the requirement is typically 90 days of income and cash flow documentation. This ensures that you have sufficient financial resources to make the down payment and support the mortgage payments. Providing a 12-month period for income and cash flow purposes is often sufficient to meet this requirement.

Final Thoughts

When applying for a mortgage, it is essential to be aware of the bank's requirements for bank statements and down payment proof. Understanding these requirements can help streamline the process and ensure that you have all the necessary documentation ready. Always read the details of the housing loan application given by the bank carefully and be prepared to provide any additional explanations or documents as requested.

For more information or specific guidance related to your situation, consider consulting with a mortgage professional or speaking directly with the bank's loan officer.

Author: Martin Straka
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