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VA Approved Sources for Funds

By: Grant Moon 03/21/14 11:01 am

VA Approved Sources for Funds

Using your VA home loan benefit in order to buy and finance a home, there’s no need for a down payment. That’s hands-down the most attractive feature of a VA mortgage. At the same time, the VA restricts certain closing costs that the veteran can pay yet regardless of this fact, the veteran will still need to have an amount set aside for other costs associated with the home purchase. The veteran can be responsible for an appraisal, credit report and origination fees among others but there are also other needs such as a homeowner’s insurance policy and escrow accounts. When you speak with a VA lender, you’ll be provided with a list of estimated closing costs that you’ll need to come up with. And there are rules about where these funds can come from. Some acceptable, some not.

Acceptable sources of funds come from a liquid account that you own. The account must have your name on it and the source of the funds documented. Your bank statement with your account number and name on it shows deposits on the 15th and 30th of $2,000 that comes from your employer. Your savings account can also show regular deposits coming from your checking account.

Stocks, bonds and mutual funds can be counted as long as the documentation of selling those assets is provided. Acceptable funds may also be in the form of a financial gift from a family member. If gift funds are used, the VA lender will provide you with the necessary paperwork needed to document the gift. Income tax refunds can be used as well as your amount vested in a retirement account.

What funds are not allowed? Any funds that cannot be sourced, regardless of the amount. If you can’t prove where a deposit came from, it will be left out of the equation. Unsecured funds, such as a cash advance on a credit card, are not allowed either. In short, if the fund has your name on it and you can prove the source of the funds, you’re good to go.

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