Big red flag for underwriting — and it could kill your deal

This one sounds harmless.
You’re getting your finances in order, making sure everything is ready… so you transfer some money between accounts, or deposit a chunk of cash from a family member, or liquidate a stock account.

Makes sense, right?

But to a mortgage underwriter, this is a giant red flag — and it could delay or even derail your loan.

Why Moving Money Around Is a Problem

Lenders want to verify that your down payment and closing costs are really yours — and that you didn’t borrow the money somewhere else.

Why?
Because your loan approval is based on your:

  • Income
  • Credit
  • Debt-to-income ratio

If it looks like you borrowed money for your down payment — even if you didn’t — they’ll treat it like new debt. That throws off your ratios, and it can result in your loan being denied at the very last minute.

What Does “Seasoned Funds” Mean?

When a lender says they want your funds to be “seasoned,” they mean:

They want to see the money sitting in your account, untouched, for at least 60–90 days (3+ months is even better).

If the money has been sitting in a regular savings account for a few months, you’re good.

But if you:

  • Just sold stock
  • Just transferred from a 401(k)
  • Just deposited a large cash gift
  • Just moved money between accounts
  • Just wired funds from a business account

The lender is going to ask for documentation — a lot of it. They’ll want to see:

  • The source
  • The transaction trail
  • Proof it’s not a loan
  • Gift letters, if applicable

And if anything looks suspicious or incomplete?
It could delay your closing or worse — get your loan denied outright.

House Karma’s Advice

To avoid a paperwork nightmare (or losing your home altogether), follow these simple rules:

✅ Decide where your down payment and closing cost funds are coming from before you start home shopping
✅ Move that money into a basic checking or savings account at least 90 days before applying for your loan
✅ Don’t shift it around between accounts
✅ Don’t deposit large sums or gifts unless your lender tells you exactly how to document it
✅ If you’re using funds from a 401(k), IRA, or brokerage account, talk to your lender (and your House Karma broker) first — we’ll guide you on how to handle the paper trail correctly

Bottom Line

Money movement equals risk — at least in the lender’s eyes.

Even if everything is completely legit, if you can’t clearly show where your funds came from, the lender might just say no.
And that’s the last thing you want when you’re days away from closing.

So keep your funds clean, clear, and parked well in advance.
We’ll help you plan it all out so your loan sails through without last-minute surprises.

At House Karma, we don’t just help you find the home — we help you protect the deal every step of the way.