Stocks, Stock Options, Bonds, and Mutual Funds
Vested assets in the form of stocks, government bonds, and mutual funds are acceptable sources of funds for the down payment, closing costs, and reserves provided their value can be verified. The lender must verify the borrower’s ownership of the account or asset.
| Asset Type | Determining the Value of the Asset |
|---|---|
| Stocks and mutual funds | The lender must determine the value of the asset (net of any margin accounts) by obtaining either
|
| Stock options | The value of vested stock options can be documented by
|
| Government bonds | The value of government bonds must be based on their purchase price unless the redemption value can be documented. |
When used for the down payment or closing costs, if the value of the asset is at least 20% more than the amount of funds needed for the down payment and closing costs, no documentation of the borrower’s actual receipt of funds realized from the sale or liquidation is required. Otherwise, evidence of the borrower’s actual receipt of funds realized from the sale or liquidation must be documented.
When used for reserves, 100% of the value of the assets may be considered, and liquidation is not required.
For additional information, see B3-4.3-01,Stocks, Stock Options, Bonds, and Mutual Funds.
Retirement Accounts
Vested funds from individual retirement accounts (IRA/SEP/Keogh accounts) and tax-favored retirement savings accounts (401(k) accounts) are acceptable sources of funds for the down payment, closing costs, and reserves. The lender must verify the ownership of the account and confirm that the account is vested and allows withdrawals regardless of current employment status.
If the retirement assets are in the form of stocks, bonds, or mutual funds, the account must meet the requirements of B3-4.3-01, Stocks, Stock Options, Bonds, and Mutual Funds, for determining value and whether documentation of the borrower’s actual receipt of funds is required when used for the down payment and closing costs. When funds from retirement accounts are used for reserves, Fannie Mae does not require the funds to be withdrawn from the account(s).
For additional information, see B3-4.3-03, Retirement Accounts.