Introduction
This topic contains information on depository accounts, including:
- Depository Accounts
- Business Assets
- Evaluating Large Deposits
- Request for Verification of Deposit
Depository Accounts
Funds held in a checking, savings, money market, certificate of deposit, or other depository accounts may be used for the down payment, closing costs, and financial reserves. The funds must be verified as described inB3-4.2-01, Verification of Deposits and AssetsB3-4.2-01, Verification of Deposits and Assets. Unverified funds are not acceptable for the down payment, closing costs, or financial reserves.
The lender must investigate any indications of borrowed funds. These must be identified differently based upon how the asset account was verified.
Business Assets
Business assets may be an acceptable source of funds for the down payment, closing costs, and financial reserves. The borrower must be listed as an owner of the account and the account must be verified in accordance withB3-4.2-01, Verification of Deposits and AssetsB3-4.2-01, Verification of Deposits and Assets. If the borrower is also using self-employment income from this business to qualify, see Section B3–3.2, Self-Employment Income, for additional information on the analysis of a self-employed borrower.
Evaluating Large Deposits
A large deposit is defined as a single deposit that exceeds 50% of the total monthly qualifying income for the loan. When bank statements (typically covering the most recent two months) are used, the lender must evaluate large deposits. SeeB3-4.1-04, Virtual CurrencyB3-4.1-04, Virtual Currencyfor additional information when a large deposit may be from virtual currency that was exchanged into U.S. dollars. Requirements for evaluating large deposits vary based on the transaction type, as shown in the table below.
Transaction Type | Evaluation Requirements |
---|---|
Refinance transactions | Documentation or explanation for large deposits is not required; however, the lender remains responsible for ensuring that any borrowed funds, including any related liability, are considered. |
Purchase transactions |
Examples
|
Note: If the source of a large deposit is readily identifiable on the account statement(s), such as a direct deposit from an employer (payroll), the Social Security Administration, or IRS or state income tax refund, or a transfer of funds between verified accounts, and the source of the deposit is printed on the statement, the lender does not need to obtain further explanation or documentation. However, if the source of the deposit is printed on the statement, but the lender still has questions as to whether the funds may have been borrowed, the lender should obtain additional documentation.
The DU validation service automates the assessment of large deposits. When assets are validated, DU issues a message indicating which large deposits require documentation. Compliance with the DU messages satisfies the requirement for documenting large deposits. SeeB3-2-02, DU Validation ServiceB3-2-02, DU Validation Service
Request for Verification of Deposit
When a Verification of Deposit (Form 1006) (VOD) is used and depository activity is not included, the lender must verify the source of funds for
accounts opened within the last 90 days of the application date, and
account balances that are considerably greater than the average balance reflected on the VOD.
Recent Related Announcements
The table below provides references to recently issued Announcements that are related to this topic.
Announcements | Issue Date |
---|---|
Announcement SEL-2022-10 | December 14, 2022 |
Announcement SEL-2022-04 | May 04, 2022 |
Have questions?
Get answers to your policy and guide questions, straight from the source.
Get Started
Work with Fannie Mae
- Customer Login
- Password Reset
- Not a customer? Get Started
Products & Solutions
Support & Resources
- Customer Service
- Learning Center
- Guide Forms