“Mattress Money” and Mortgages

“Mattress Money” and Mortgages

Why Some Lenders Don’t Count Mattress Money

What is “mattress money?” It’s a funny term but it means funds that someone owns but does not have a paper trail. Let’s look at how mattress money can be viewed by a lender and how to document these funds. It’s a good thing to come across some extra cash. Maybe the sale of a car or a small inheritance or someone just gave you some funds to help you buy a home in the future. However it’s acquired, it’s always better to have more money than less, right?

When Mattress Money Helps and When it Doesn’t

One of the more important things lenders look at when evaluating a home loan application is how much money is available for the transaction. There needs to be funds showing enough money for the required down payment, if any, closing costs and some extra funds left over after closing called “cash reserves.” Cash reserves are counted as the number of months’ worth of house payments are left after the loan has closed. If the total mortgage payment, including taxes and insurance, is $2,000 and the cash reserve requirement is three months, there should be an additional $6,000 available. This is on top of the down payment and closing costs. But these funds have to be verified as yours.

How Income Verification Works

Verification is done by reviewing recent copies of bank statements. If your savings account shows $20,000 and the checking account statements show regular deposits on the 1st and 15th, the lender will begin to tally the total amount available and when enough funds are verified, the loan application continues through the approval process.

But in this scenario, the funds are short by $5,000. The down payment, closing costs and reserves needed add up to $30,000. That’s okay though, because at home in the vault, there is $7,000 in cash ready for you to use any way you wish. You take out the $7,000 and deposit it in your checking account. Yet there’s still a problem. Even though you’ve saved up those funds over the past year or so, you may not be able to use them. At least, the lender won’t count them as yours. This is called mattress money. Loosely meaning the cash is stuffed in your mattress at home. It’s frustrating because you know the funds are yours and yours alone, but the lender is ignoring them.

The issue here is there is no way to source where those funds came from. Are the funds a personal loan? If so, at some point the loan will need to be paid back. Will there monthly be monthly payments and if so, how much? In both instances it can affect the ability to repay the mortgage.

If it’s cash saved up and you know you’re going to buy a home in the future, pull the cash out of the vault and into your bank account. This will let the funds “season” over time and the lender will not question where the funds came from. How long does it take to season funds? There’s no universal guideline but in general funds may be considered yours after two or three months.


If the funds are from the sale of a car, provide a copy of the bill of sale, copy of the check and copy of the deposit into your bank account. If the funds are a gift from a family member or qualified donor, again provide a paper trail. But if it’s cash at home, “mattress money,” put it in the bank as soon as able.