What counts as a 'large deposit' and what documentation usually satisfies it?

What counts as a large deposit during underwriting?

You want to know what lenders consider a large deposit and how to document it properly during underwriting. Large deposits typically refer to any single deposit that's 25% or more of your monthly gross income, though some lenders use 50% as the threshold. Lenders flag these deposits because they need to verify the money comes from acceptable sources and isn't borrowed funds that would affect your debt-to-income ratio.

Documentation requirements depend on the deposit source. For gifts, you'll need a gift letter from the donor stating the money doesn't require repayment, plus bank statements showing the donor had the funds. Sale proceeds from assets like stocks or a car require the sales contract or brokerage statement. Bonus payments need a letter from your employer explaining the bonus amount and timing. Cash deposits from savings typically need statements showing you accumulated the money over time.

Some deposits get easier treatment. Payroll direct deposits, government benefits, and transfers between your own accounts usually need minimal documentation. Tax refunds require your tax return or IRS transcript. The underwriter reviews each situation individually based on your loan type and lender guidelines.

Gather statements and documentation for any large deposits before your lender requests them. Your loan officer can walk you through what specific paperwork each deposit type requires.