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Excluding Transfers, Refunds and Other Non-Income Deposits

Oct 16, 2026 · Varaxon Technologies LLC d/b/a StatementReady

This is general practice for education, not underwriting guidance. Program rules vary; check your lender's current guide.

Bank statement income is built from deposits, but not every deposit is income. Counting the wrong ones inflates qualifying income and invites conditions.

Deposits commonly excluded

Lender rules vary, but these are commonly backed out:

  • Transfers between the borrower's own accounts. Money moving from savings to checking isn't new income.
  • Refunds and returns. A vendor refund reverses an expense; it isn't revenue.
  • Loan proceeds and credit-line advances. Borrowed money isn't income.
  • Reversals and returned items. A deposit that was later returned shouldn't count.
  • Non-business deposits on business statements. Personal gifts or one-off sales may need separate treatment.

How to handle them

  1. Scan each month's credits and tag anything that isn't clearly earned income.
  2. Match transfers to the other account's statement where you have it.
  3. Note each exclusion: date, amount, description and reason.
  4. If you can't tell what a deposit is, ask the borrower for a letter of explanation rather than guessing.

Keep it consistent

Apply the same rules every month. An exclusion in one month and not the next is a common reason an underwriter recalculates.

FAQ

Are all transfers excluded?

Transfers between the borrower's own accounts usually are. Check your lender's guidelines for anything else.

Do I need to document exclusions?

Keeping a reason for each one makes the worksheet easier to defend and to review.

What about large unexplained deposits?

Flag them and request a letter of explanation. See our guide to spotting large deposits by hand.

Sources

No external sources are cited. This article describes general practice; program rules vary by lender, so check the current guide for the loan you're working on.

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