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Mortgage FAQ: Can I Use a Tax Refund for a Down Payment on a Home?


"I’D LIKE TO PUT MY TAX REFUND TOWARDS MY DOWN PAYMENT, BUT I KNOW THAT THE FUNDS FOR MY DOWN PAYMENT NEED TO BE IN MY ACCOUNT WELL BEFORE MY LOAN CLOSES. WILL THIS BE A PROBLEM?"

Normally, lenders require that your down payment be “sourced and seasoned.” What does that mean? Having sourced funds mean that you can provide a paper trail of where the money came from. Seasoned funds are funds that have been in your account for a particular length of time, usually between 60-90 days, depending on your lender’s policies. However, funds from tax refunds are treated differently. Your tax refund is considered to be seasoned as soon as the deposit is made into your bank.

As for being sourced, although you will be required to provide a copy of the check and proof of the deposit, you won’t need to show two or three months’ worth of bank statements as proof. Keep in mind that this will only apply to the portion of your down payment that comes directly from your refund. If you have other funds that you’re using to contribute to your down payment, those funds must be sources and seasoned per your lender’s policies. For more information about your down payment, contact your mortgage professional.

For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.

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Licensed by the Commissioner of Banks - License No. MB2671