Them looking at your accounts is more about income than expenses. They want to see how much money you're making and that it is recurring. They don't want to give you a loan based on you having $x and then find out the only reason you have that is because your friend gave you a loan for it. That would make you less likely to pay the mortgage back because you have other liabilities. So if you have a cash deposit they will want an explanation.

You may be able to open two accounts, at two banks. Put your reliable income into one, and transfer it monthly to the other, which you use for irregular personal spending. Give the loan company the statements for the first account.

It's a requirement to do so for ALL your accounts. Same for naturalisation applications, which I'm also doing.

Last time I applied for a loan, they followed up asking for bank statements for the account I had given on the application form to receive the funds.

I agree with you, and that doesn't seem right, but it is what the request asked for.

In your perfectly dispassionate banking office this is true, but in reality, people will judge, even subconsciously (though the subconscious bit is giving too much credit).

To give a true, recent, example, I might not like having the loan officer know about my donations to the Green Party - they could be right wing, after all!

Also, some places are just small and people gossip.

For the last tax filing that needed a voucher for income, I blacked out pretty much everything except the amounts received / sent. Is this not allowed in such a case for you in the US?

Tax statements are sufficient for proving income. Banks also need verification of the origin of funds for the down payment and closing costs, which is where the other statements come in.

I don't know. I don't live in the US anymore.