What's In A Bank Statement

What are lenders looking for when they request bank statements? Funds to close, funds to make the loan payments, and funds to start the work.

Funds to close; the down-payment, the points, and any other fees. Time, money, and effort are spent to prepare the loan to close and all of them will be wasted if the loan does not close. If the lender does not charge any upfront fees, then a loan which does not close is a financial loss.

Funds to make the loan payments; 3 - 6 months of loan (interest) payments. Without the ability to make payments the borrower would be setup for failure, and a default on the loan. Default and foreclosure are a financial loss for the borrower, and a financial cost for the lender.

Funds to start the work; 10% - 15% of the rehab budget. Without the ability to begin construction the result is a stalled out project. This means an unfinished property the borrower cannot sell, and the lender does not want.

Essentially lenders are looking for whether there are enough funds, and where they came from.