HB-1-3550
SECTION 2: EVALUATING BORROWER ASSETS [7 CFR 3550.54(d)]
4.5
OVERVIEW OF POLICIES RELATED TO ASSETS
Assets affect an applicant’s ability to obtain a loan in 2 ways. First, applicants may be
required to use non-retirement assets to make a down payment covering some of the costs of
purchasing a home. Second, many types of assets generate income that must be included in the
calculations of annual and repayment income. An applicant’s assets are considered for annual
and repayment income, as well as for down payment purposes, as applicable. Net family assets
are considered for annual income and down payment purposes, as applicable, but shall be
excluded from repayment income. Asset documentation may also provide useful information for
loan underwriting. Exhibit 4-3 presents a list of assets that must be considered when making
these determinations and also identifies certain types of assets that are not considered.
Exhibit 4-3
Types of Assets
The following types of assets must be
considered. Non-retirement assets including:
• Savings accounts; the average 2-month balance of checking accounts; safe deposit boxes;
• Stocks, bonds, Treasury bills, savings certificates, money market funds, and other investment accounts;
• Equity in real property or other capital investments;
• Revocable trust funds that are available to the household;
• Lump-sum receipts, such as inheritances, capital gains, lottery winnings and settlement on insurance
claims (including health and accident insurance, worker’s compensation, and personal or property losses);
• Assets held in foreign countries; and
• Personal property (such as jewelry, coin collection or antique cars) held as an investment.
Retirement assets (applicants only) including:
• Amounts in voluntary retirement plans that can be withdrawn, such as individual retirement
accounts (IRAs), 401(k) or 403(b) plans, and Keogh accounts; and
• Amounts in other retirement and pension plans that can be withdrawn without retiring or
terminating employment.
The following types of assets are not considered.
• The value of necessary items of personal property, such as furniture, clothing, cars, wedding rings and
other jewelry not held as an investment, and vehicles specially equipped for persons with disabilities;
• Assets that are part of any business, trade, or farming operation in which any member of the household
is actively engaged;
• The value of an irrevocable trust fund, or the value of any trust over which no member of the household
has control;
• Term life insurance policies where there is no cash value;
• Interests in American Indian restricted land;
• The value of tax advantaged health, medical savings or spending accounts, and college savings plans; and
• For income calculations, any assets on hand that will be used to reduce the amount of loan.