Why do they care about 'seasoning' of funds?

Why do lenders care about seasoning of funds?

You want to know why lenders check how long money has been in your bank accounts before approving your mortgage. Lenders require "seasoned" funds—money that's been sitting in your accounts for at least 60 days—to verify the money comes from legitimate sources and meets lending guidelines.

Lenders need to document where your down payment and closing costs come from. Recent large deposits can raise questions about whether the money is borrowed, which would affect your debt-to-income ratio. Seasoned funds show a clear paper trail and reduce the lender's risk. The seasoning requirement also helps lenders comply with anti-money laundering regulations.

Your lender will review bank statements from the past two months and ask about any deposits that don't match your regular income. Gift funds from family members don't need seasoning, but they require a gift letter and documentation showing the donor's ability to give. If you recently moved money between accounts or received a bonus, the lender can walk you through what documentation they need.

Share your recent financial activity with your loan officer early in the process. They can explain which funds qualify and help you plan the timing of any account transfers before you apply.