A:The number of months required will vary based on your lender. However, the typical requirement is a full two-months of statements. The transaction history must cover a full 60 day period. Lenders commonly want to see the following information on the bank statements:
- Beginning and ending balances
- Name of the account holder(s)
- Full transaction history of deposits and withdrawals
- Account number
- Period that the statements covers printed on the statements
A mortgage underwriter will commonly review the bank statements on behalf of the lender. People often assume that the underwriter will do a quick glance at the balances to make sure the required assets are verified and then move on. However, you should expect a full review of the transaction history. The underwriter will look for things like large deposits and undisclosed debts. Anything the is not clear and may potential affect the loan approval will likely be questioned by the underwriter. You may be required to provide additional documentation to clear up any discrepancies found by the underwriter. Please check out our article on what mortgage underwriters look for on bank statements to get an idea of the review process.
The lenders full review of bank statements might seem excessive to some, but you have to remember that the lender is taking on the risk. They thoroughly review the bank statements to ensure they are lending according to their existing guidelines. For example, the lenders guidelines may require that all large deposits greater than 50 percent of the total income be verified. If the borrower was qualified with income of $5,000 per month and the bank statements reflect a unspecified (non-payroll) deposit of $4,000, the underwriter will request the source of this deposit.
Why is it so important to document this $4,000 deposit? Depending on the loan, this deposit could adversely affect the loan approval. Maybe the source is an undisclosed loan and the borrower no longer qualifies for the mortgage with this new monthly payment added as a debt. As another example, maybe the $4,000 came from a gift and the person who gave the gift was not an eligible gift donor per the lenders guidelines. Essentially, the $4,000 could have came from countless sources. The lender simply needs clarification on the deposit to see if it was from acceptable source that meets the lending guidelines.
Fortunately, many banks provide online bank statements that can easily be printed and contain the necessary documentation that your lender needs. However, this might not be an easy task if you have multiple bank accounts with various banks. If you are working with a mortgage professional such as a loan officer, they will be able to guide you on the bank statement documentation to send your lender. Many times you may only need to send the lender the bank statements from your main account and not the entire collection of statements from your various accounts. Sending the lender too much documentation can slow down the lending process, which is undesirable for all who are involved.