Selling Guide

Published June 3, 2020

The Selling Guide is organized into parts that reflect how lenders generally categorize various aspects of their business relationship with Fannie Mae. To begin browsing, select from any of the sections below. You may also download the entire Selling Guide in PDF format.

View All Selling Policy Updates

Download PDF

Hint: Ask in a form of a question.

For best results, pose your search like a question.

B3-4.3-19, Cash Value of Life Insurance (05/27/2014)


This topic contains information on the cash value of life insurance, including:

Cash Value of Life Insurance and Debt-to-Income Ratios

Net proceeds from a loan against the cash value or from the surrender of a life insurance policy are an acceptable source of funds for the down payment, closing costs, and reserves.

The lender must assess repayment or additional obligation considerations to determine the impact on borrower qualification or reserves.

If penalties for failure to repay the loan are limited to the surrender of the policy, payments on a loan secured by the cash value of a borrower’s life insurance policy do not have to be considered in the total debt-to-income ratio.

If additional obligations are indicated, the obligation amount must be factored into the total debt-to-income ratio, or subtracted from the borrower’s financial reserves.

Documenting Borrower Receipt of Funds

If the funds are needed for the down payment or closing costs, lenders must document the borrower’s receipt of the funds from the insurance company by obtaining either a copy of the check from the insurer or a copy of the payout statement issued by the insurer. If the cash-value of the life insurance is being used for reserves, the cash-value must be documented but does not need to be liquidated and received by the borrower.

Have You Tried Ask Poli?

Poli knows. Just ask.

Ask Poli features exclusive Q&As and
more—plus official Selling & Servicing

Try Ask Poli

Related Articles

B3-4.3-01, Stocks, Stock Options, Bonds, and Mutual Funds (06/30/2015)

IntroductionThis topic contains information on stocks, stock options, bonds, and mutual funds. Stocks, Stock Options, Bonds, and Mutual Funds Vested...

Read more

B3-4.3-02, Trust Accounts (04/01/2009)

IntroductionThis topic contains information on trust accounts. Trust Accounts Funds disbursed from a borrower’s trust account are an acceptable source...

Read more

B3-4.3-03, Retirement Accounts (06/30/2015)

IntroductionThis topic contains information on retirement accounts. Retirement Accounts Vested funds from individual retirement accounts (IRA/SEP/Keogh...

Read more

Have guide questions? Get answers to all of your policy questions, straight from the source.

Get Started
Having Issues with Seeing this Page Correctly?

Use Firefox or Chrome   How to do a hard refresh in Internet Explorer
We recommend that you use the latest version of FireFox or Chrome.

Download Firefox
Download Chrome
  A hard refresh will clear the browsers cache for a specific page and force the most recent version of a page.
    Hold the Ctrl key and press the F5 key.

Email Us
If you still have Technical Support questions, feel free to