Buying a Home in Colorado? You Have the Down Payment. Can You Document It?

You’ve been saving for a home. Some of the money is in savings, some might be in your business account, and maybe you’ve kept some cash at home.

You know you have enough for the down payment. Then the lender starts asking where the money came from.

That can feel frustrating. You worked for it, saved it, and now you’re being asked to explain it.

Here’s why that conversation matters: when you’re getting a mortgage, the lender needs to verify the funds you plan to use. Where you keep the money, how you received it, and how it gets to closing can all affect the documentation.

If you’re planning to buy a home in Colorado, this is something worth discussing before you start moving money around.

Why does the lender need to know where the money came from?

Your bank balance tells part of the story. The lender also needs to establish that the money comes from an acceptable source and identify whether any of it was borrowed.

That matters because borrowed money may create another payment that affects your qualification. And funds that can’t be verified may not be available to count toward your purchase.

My recommendation is to bring up the source of your down payment during the first conversation. We can look at what you have, where it is, and what documentation your loan program may require.

Can you use cash you’ve kept at home?

This is where people can run into a problem.

You may have saved cash for years. You might keep it in a safe because that’s how you’ve always handled your savings. There’s no judgment in that.

The challenge is documenting it for a mortgage.

Under Fannie Mae’s standard guidelines, cash kept outside a financial institution generally isn’t an acceptable source for the down payment or closing costs. Certain HomeReady loans have an exception with additional requirements. Other programs have their own rules.

Depositing the cash creates a record of the deposit. It doesn’t necessarily establish where the cash originally came from.

Before you deposit money specifically for a home purchase, tell your loan officer what you have and how you accumulated it. We need to determine what can be documented and whether your intended loan program allows it.

Does the money have to be in your account for 60 days?

You may have heard that your down payment has to sit in checking or savings for 60 days.

That’s an oversimplification.

Many mortgage applications involve reviewing approximately two months of bank statements. However, reviewing 60 days of account activity is different from requiring every dollar to have been in that account for 60 days. Documentation can also vary based on the loan program and verification method.

For example, moving money from your own verified savings account to your own checking account may be acceptable when the transfer can be traced. An eligible gift or documented asset sale may also provide funds without a universal 60-day waiting period.

Don’t assume that waiting two months automatically resolves a documentation issue. Ask what applies to your situation before building your purchase timeline around that advice.

Can you use money from your business account?

Possibly. Business funds can be an acceptable source, but there are additional questions to answer.

We need to verify your ownership and access to the account. When you’re also using income from that business to qualify, the review includes whether withdrawing the money would negatively affect the business.

Think about a business account that holds money for payroll, taxes, supplies, and upcoming expenses. The balance may look substantial, but some of that money already has a job.

Moving it into your personal checking account doesn’t eliminate the need to review its business source.

There also isn’t one universal formula that says every business owner can use a certain percentage of the account balance. The documentation and analysis depend on the loan and the business.

Before taking a distribution for your down payment, let’s review the mortgage requirements. Your CPA can help you understand any tax or accounting implications.

What if your savings are in gold or another asset?

Some buyers hold part of their savings in gold, collectibles, or other personal assets.

Selling an asset may provide eligible funds for a home purchase. The sale needs to meet the applicable program requirements, and the lender may need documentation of ownership, value, the transaction, and receipt of the proceeds.

If you’re considering selling gold, for example, ask about the required records before completing the sale. A dealer receipt, transaction details, and a traceable payment may help establish the paper trail, but the lender needs to confirm what’s sufficient for your loan.

The amount you receive also may not automatically be the amount the lender can count. Under some guidelines, documented value can affect the eligible amount.

That’s a good reason to have the conversation before liquidating something you intended to keep.

Can a family member give you money for the down payment?

A genuine gift may be an option, depending on the loan program, property, and donor’s relationship to you.

The lender will generally need a gift letter and evidence of the funds or their transfer. A gift must come without an expectation of repayment.

If a family member expects you to pay the money back, tell your loan officer. That needs to be evaluated as borrowing rather than described as a gift.

And moving your own money through a relative’s account doesn’t turn it into gift funds. The documentation needs to reflect the actual source and arrangement.

Before anyone sends money, ask your loan officer how the gift should be documented and transferred. It’s easier to follow the right process from the beginning.

What should you gather before applying?

Start with a clear picture of the money you intend to use. You don’t have to figure out every underwriting requirement yourself.

A useful starting list is:

• Where the funds are now. Identify personal accounts, business accounts, cash savings, and assets you may sell.

• How much you plan to contribute. Include your down payment and leave room to discuss closing costs and any required reserves.

• Recent account statements. Provide complete statements when requested so the account ownership and activity are visible.

• Records of transfers or asset sales. Keep the documents that connect the original source to the funds you receive.

• Any expected family assistance. Explain who is providing it and whether repayment is expected.

• Your purchase timeline. Tell your loan officer when you hope to make an offer and close.

Use your lender’s secure document process for financial records.

If some documentation is missing, say so. That gives us a place to start. We can identify what’s available, what still needs to be verified, and whether another approach may fit.

Before you move the money, let’s talk

You don’t need to reorganize all your finances before calling a loan officer.

Tell me where the money is and what you’re trying to accomplish. We’ll look at the documentation requirements, talk through any limitations, and determine what the next steps may be.

Having that conversation early gives you a clearer picture before you’re under contract and working toward a closing date.

If you’re planning a home purchase in Colorado, schedule a conversation with me. We can start with your questions and work through the details together.

Chris Milker
NMLS #277954
Success Mortgage Partners

Documentation and eligibility requirements vary by loan program, lender, and individual circumstances. All loans subject to approval. Equal Housing Lender.