Explaining that Down Payment Paper Trail

Again, with the paperwork! I know, it’s a lot. Trust me, I do this everyday, for multiple files. It certainly can seem like a lot of paperwork but if you want to buy a house, you’ll have to provide it for the lender.

Providing documents for income confirmation seems to be a lot of paperwork sometimes. Job letter, pay stub, T4’s, Notice of Assessments, T1 Generals to name a few, but these are all straight forward. When we start talking about bank statements and providing proof of down payment, this is where I lose people sometimes.

We are required by all lenders to provide them with 90 days history of all down payments (and often closing costs) which is really easy when you have been saving up money in one account all this time. Printing your last 90 days (not 89 days, it HAS to be a full 90 days) is easy but when you have a checking account where you have your pay check coming in and then you transfer large amounts of money into a savings account, most people will just provide me with 90 days of the savings account because that’s where the money is. If you think this will work, you’d be wrong. When I go through the 90 days of your savings account and I see 4 large transfers of $2000 in that 3 months, I have to provide the lender with the source of that money. I can’t just tell them that you transferred from your checking account, because as much as I am a trustworthy person, that doesn’t cut it. I have to also provide them with 90 days history of the checking account as well.

Even this scenario is pretty simple to meet the requirements. I have seen people transferring large amount between 4 or 5 accounts and yep, you guessed it, I have to get a 90 days history of all those accounts. Every. Last. One. We have to provide a paper trail for 90 days of any money being used for your down payment. Why you ask? The Anti-Money Laundering and Anti-Terrorism Act. This is an Act in place to protect the financial institutions against illegal transactions.

I know, we live in Brandon Mb, this stuff doesn’t happen here! Ok, maybe it does but more commonly you do see it in the larger centres like Toronto and Vancouver and you know the saying “one bad seed spoils it for the bunch.” Lenders across the country have to abide by these rules for both your protection and theirs.

So next time I ask for 90 days of your down payment and you bring me your bank statements and you have $100 in there for 85 days and then suddenly there is a $15,000 deposit in there on the 86th day, please don’t be angry with me when I tell you that I will have to get proof of the source of that deposit. I promise, I don’t ask to be nosy. I ask because I have to in order to get you a mortgage.

So keep it simple, if you are planning on buying a house, try to keep your money in one place . . . at least for 3 months prior to applying. 🙂


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