Income
Non-Recurring Deposits: Definition & Example
What Is Non-Recurring Deposits?
Non-recurring deposits are one-time or irregular deposits, such as tax refunds, transfers between accounts, loan proceeds, or gifts, that are usually excluded from ongoing income estimates.
What does non-recurring deposits mean?
Not every deposit is income. Moving money from savings to checking, a tax refund, a car sale, a loan disbursement, a Venmo reimbursement from a roommate, and a birthday gift all increase the balance but do not tell you what the person earns each month.
Income analysis typically separates these from recurring income. Including them would inflate estimated income, sometimes dramatically.
Large non-recurring deposits can still matter. Lenders often ask about unexplained large deposits because they could be undisclosed loans, and a large one-time deposit may affect reserves or proof of funds.
Non-recurring deposits example
In one quarter, an applicant’s account receives $11,400 in payroll, a $2,800 tax refund, and a $5,000 transfer from her savings account. Counting everything would suggest $6,400 per month. Excluding the refund and transfer puts her income at about $3,800 per month.
Related terms
- Recurring DepositsRecurring deposits are payments that land in a bank account on a regular, repeating pattern, such as a paycheck every two weeks or a monthly benefit, and are commonly treated as signs of ongoing income.
- Transaction CategorizationTransaction categorization is labeling each bank or card transaction by type, such as payroll, rent, groceries, transfer, or loan payment, so the data can be summarized and analyzed.
- Bank Statement AnalysisBank statement analysis is reviewing a person’s or business’s bank transactions to estimate income, spot recurring expenses, check balances, and flag risks such as overdrafts or unusual deposits.
- Verification of DepositVerification of deposit (VOD) is a form, commonly used in mortgage lending, in which a bank confirms an applicant’s account details, current balance, and average balance.
