Why does the lender care where my downpayment came from?

Q:  Why does the lender care where the money is coming from to buy a house as long as I have it? What business is it of theirs?

A:  A few years ago they didn’t care but this is one area that has really changed. Any deposits or transfers into your bank account that are not clearly marked as payroll must be satisfactorily documented. If a buyer is taking out a cash advance on a credit card or borrowing money from a friend to buy a house, statistically they are more likely to default on the loan than if the buyer’s own savings were used. We advise our clients of this at the time of pre-approval to avoid surprises during the loan process that can delay or deny their loan.