How does an underwriter view cash deposits compared to transfers?

How do underwriters view cash deposits vs transfers?

You want to understand how an underwriter evaluates cash deposits differently from transfers between your bank accounts. Underwriters review both types of transactions, but cash deposits typically trigger more detailed review because the money source isn't as clear from bank statements alone.

Underwriters can see electronic transfers move between your accounts, which makes the paper trail straightforward to follow. Cash deposits require additional documentation because the underwriter needs to verify where that money came from. Large cash deposits often prompt requests for explanation letters and supporting documents like pay stubs, tax returns, or gift letters if the money came from family.

Check your bank statements for any cash deposits over a few hundred dollars from the past two to three months. Note which deposits you can document easily and which might need explanation. Common acceptable sources include cash back from purchases, small business income, or legitimate cash gifts, but each needs proper documentation.

Gather documentation for significant cash deposits before the underwriter requests them. Write brief explanation letters describing the source and attach supporting documents like receipts or income records. Share these materials with your lender early in the process so they can walk you through any additional requirements for your specific situation.