So your Grandma just found out that you are wanting to purchase a home. She wants to help and hands you a pretty large amount of cash. Can you use this towards your purchase?
Unfortunately cash is not an acceptable source of funds for a home purchase. Why can’t you use it? There are many factors and reasons why a cash deposit can not be accepted and counted as your available funds towards your purchase. To make sure we are on the same page, I am not referring to cash purchases, where you purchase a home with cash. This is in regards to applying for a mortgage and having funds for your purchase (earnest money, down payment, closing costs).
The main reason cash deposits are not acceptable is due to the Patriot Act which involves anti-money laundering laws. Sorry folks but there is no work around on this, there is no way you can use cash. All funds need to be documented and sourced when purchasing a home. When getting pre-approved you will need to provide a minimum of two months most recent bank statements when you go under contract. If you buy new construction this will continue on through your whole contract as you give deposits to the builder. If you are getting gift funds from a family member they may be required to provide one months most current statement from the account they are gifting the funds from, or a letter from their bank that they have “x” amount of funds to gift. Clear as mud?
If you have any questions please give us a call, we are always happy to help.