While a steady stream of income is a must for purchasing a home, lenders will not accept funds that haven’t been deposited into a bank. (Photo: Pexels).
BY MICHAELA PHILLIPS Guaranteed Rate, Inc.

The cannabis industry is a lucrative business, and it’s quickly growing throughout the United States. In areas like Colorado where recreational marijuana has been legal for years, many cannabis dispensary owners and employees are thriving. According to CNBC, Colorado’s recreational marijuana sales topped $1.55 billion in 2018, and this booming industry isn’t expected to slow in the coming years. If you’re a member of the cannabis industry seeking homeownership, you may be planning to use a large sum of undeposited cash for a down payment. While a steady stream of income is a must for purchasing a home, lenders will not accept funds that haven’t been deposited into a bank. Here, we share why this is the case, and offer solutions for those in the marijuana industry.

Why does cash need to be deposited?

When applying for a mortgage loan, all cash to be used at closing needs to be sourced. Lenders need to see regular paychecks deposited into your account on a consistent basis. Any cash to be used for the down payment should be related to your primary source of income, or identified as gift funds. Gift funds aren’t always as straightforward to use as you might imagine: in most cases, you’ll need a letter from the donor specifying that the funds won’t need to be repaid, as well as other details about the funding.

Although undeposited cash may not be used toward the down payment, be aware that suddenly making a large deposit into your bank will also hurt your chances of qualifying. An unexpected large deposit is a red flag for lenders, and has the potential to derail the closing process. If you have a significant amount of cash to use as the down payment, you can avoid alerting your lender by making the deposit at least two full statement cycles before the lender’s review process.

Those in the cannabis industry often carry large sums of cash on hand, so it’s important to know about the lending stipulations before beginning your application process. Unsourced cash, also known as “mattress money,” cannot be used as funding toward your quest for homeownership. If you’ve saved in cash for purchasing a home, just be sure to make the deposit into your bank account at least two months before applying for the mortgage loan. If you’re currently a W2 employee or owner in the cannabis industry and you’re ready to become a homeowner, our team at Marijuana Mortgages can help you achieve your goal. We make it easy for members of the marijuana industry to obtain financing, and we offer flexible financing options to perfectly fit the needs of first-time buyers. To learn more about how we can help, please reach out to us.

Michaela Phillips is the Vice President of Mortgage Lending at Guaranteed Rate, Inc. Contact Michaela at 303.579.5517, e-mail [email protected] or visit michaelaphillips.com.
NMLS: 312874.