Income
Verification of Deposit: Definition & Example
Also called: VOD
What Is a Verification of Deposit?
Verification 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.
What does verification of deposit mean?
In mortgage lending, a VOD is often Fannie Mae Form 1006 or a similar document the lender sends to the applicant’s bank with the applicant’s authorization. The bank reports the account type, open date, current balance, and average balance over recent months.
Lenders use VODs to confirm funds for the down payment, closing costs, and reserves. Because the information comes from the bank rather than the borrower, it avoids relying on statements the borrower supplies.
Many lenders now use bank statements or digital, permission-based bank data in place of paper VODs because they are faster.
Verification of deposit example
A borrower needs $42,000 for a down payment and closing costs plus two months of reserves. The lender sends a VOD to her credit union, which reports a savings balance of $51,300 and a two-month average balance of $49,800.
Related terms
- Proof of FundsProof of funds is documentation showing that a person or business has enough money available for a purchase or investment, usually a recent bank or brokerage statement or a bank letter.
- Cash ReservesCash reserves are liquid funds a borrower or business still has available after a transaction closes, often measured in months of housing payments or operating expenses.
- Average Daily BalanceAverage daily balance is the average amount of money in an account across every day of a period, calculated by adding each day’s ending balance and dividing by the number of days.
- Verification of EmploymentVerification of employment (VOE) is the process of confirming with an employer, or a database of payroll records, that a person works there, along with details like job title, start date, and sometimes pay.
- Liquid AssetsLiquid assets are cash and other holdings that can be quickly converted to cash without significant loss of value, such as checking, savings, money market accounts, and publicly traded securities.
