Mortgage Guidelines – Acceptable Down Payment Sources

When a client has plans to get a mortgage in order to buy a new home, there are certain rules and guidelines which the client is expected to follow. According to the federal housing authority and loan modification experts, the following rules must be adhered to before one can be given a home mortgage.


  1. There will be a down payment which amounts to either 2% or 3% of the total cost of the house in question. This has to be paid upfront by the client before getting a mortgage.
  2. Banks and lenders are very serious about the source of funds used by clients for down payments. The source of such funds must be clear and well documented. This is usually done to ensure that dirty or laundered money does not find its way into the financial system through the real estate market.
  3. If a lump sum or bulk amount needs to be paid at once for the down payment, the source must be documented.
  4. The account which is being used for mortgage, called an asset account suddenly has a large deposit, the source of the money must be confirmed.


  1. Savings and checking account: funds from these accounts can be used as a source of income for mortgage payment. Before the savings and checking accounts can be used, most institutions insist on having a two-month review of all the payments from the accounts. If there are big payments, their source must be explained.
  2. Retirement Account: money can be taken from a 401 (k) account and used for mortgage payments.
  3. Gifts: gifts can be used as down payment for mortgage and this is allowed only when the gifts come from the family members.
  4. Sale of Personal items: this is not usually allowed but if there are documentation to prove that the personal items are truly yours then they can be sold to fund the account.