When lenders, both retail and private, evaluate an application to finance an investment property one of the key ingredients is the availability of funds. Buying real estate will typically require a down payment-although there are times when no down payment is required- as well as funds to pay for closing costs, both hard and soft. How lenders determine enough funds to close a deal is by reviewing bank and investment statements from the applicant and there are three primary sources of funds acceptable to most lenders.

A checking and savings account is the most common place where buyers keep their funds. When reviewing bank statements, the lender first makes certain the borrower’s name is on the statement. While that might seem obvious, sometimes there are additional names on the statement. If there are other names listed that are not a spouse, sometimes a lender will want a letter from the others listed that it’s okay for the applicant to use the funds in the account for a down payment and closing costs. If not, the lender will only allot half the available funds if there are two people on the statement.

Another common source of funds is from a business account. For those who are self-employed and run their own business, they may have access to company funds to do whatever they wish. A lender however might want a statement from the company’s accountant stating that the withdrawal of the funds needed to buy investment property will not materially harm the business. The business has its own expenses and since the business is the source of the applicant’s income, the lender wants to be certain the income will continue on a regular basis and not be interrupted.

Finally, the sale of personal assets is also allowed. This can mean the selling of stocks or mutual fund accounts. Anything that can be independently appraised and sold can typically be used as legitimate assets to buy real estate as long as the sale is properly documented.