How much of a 401(k) or IRA can count toward reserves or down payment?

Fannie Mae and Freddie Mac count the vested balance of a 401(k) or IRA, while FHA counts up to 60 percent of the value, less any loans, unless the borrower shows that more can be withdrawn after taxes and penalties. When the funds are needed to close, Freddie Mac requires evidence of liquidation unless the assets are worth at least 20% more than the amount needed, Fannie Mae applies the same 20% test to retirement assets held in stocks, bonds or mutual funds, and FHA requires evidence of liquidation for any portion used to close. Fannie Mae does not require retirement funds used as reserves to be withdrawn. The VA handbook in Strata sets no percentage.

Fannie Mae (conventional)

• Vested funds in IRA, SEP, Keogh and 401(k) accounts are acceptable for the down payment, closing costs and reserves; the lender verifies ownership, vesting, and that withdrawals are allowed regardless of current employment status. Fannie Mae B3-4.3-03
• The amount vested in a retirement savings account is an acceptable source of reserves, and retirement funds used for reserves do not have to be withdrawn. Fannie Mae B3-4.1-01 Fannie Mae B3-4.3-03
• For retirement assets held in stocks, bonds or mutual funds used for the down payment or closing costs, receipt of liquidation proceeds need not be documented if the value is at least 20% more than the funds needed; otherwise it must be. Fannie Mae B3-4.3-03 Fannie Mae B3-4.3-01

Freddie Mac (conventional)

• Eligible accounts include independent retirement accounts and IRS-qualified employer plans such as 401(k), 403(b), traditional and Roth IRAs and SEP-IRAs. Freddie Mac 5501.3
• When retirement funds are needed for closing, evidence of liquidation is required unless the combined value is at least 20% greater than the amount needed from these assets. Freddie Mac 5501.3
• Without liquidation, the vested amount of an employer plan can be used only with documentation that the borrower may make withdrawals and that severance from current employment is not required. Freddie Mac 5501.3
• Assets used for reserves must meet the same eligibility and documentation requirements in Sections 5501.3 and 5501.4. Freddie Mac 5501.2

FHA

• Up to 60 percent of the value of IRAs, thrift savings plans, 401(k) and Keogh accounts, less any existing loans, may be included, unless the borrower gives conclusive evidence that a higher percentage can be withdrawn after taxes and penalties. FHA 4000.1 II.A.4.d.iii(C)
• The portion not used for closing, after adjusting for taxes and penalties, may be counted as reserves. FHA 4000.1 II.A.4.d.iii(C)
• The lender obtains the most recent monthly or quarterly statement showing the balance, eligibility for withdrawal and withdrawal terms; evidence of liquidation is required for any portion used for funds to close. FHA 4000.1 II.A.4.d.iii(C)

VA

• Liquid assets must be verified to the extent needed to close, plus any significant assets, by VA Form 26-8497a or the last two bank statements, no more than 120 days old (180 days for new construction). VA Pamphlet 26-7, Chapter 4, Topic 4.b
• Assets that secure a loan against deposited funds, such as a 401(k) loan, may not be listed as an asset on VA Form 26-6393, Loan Analysis. VA Pamphlet 26-7, Chapter 4, Topic 4.a

The VA Lender's Handbook in Strata does not set a percentage for counting 401(k) or IRA balances; lenders apply their own overlays.

Sources

• Fannie Mae Selling Guide, September 2, 2026 version: B3-4.3-03, Retirement Accounts (p. 433); B3-4.1-01, Minimum Reserve Requirements (Acceptable Sources of Reserves) (p. 410); B3-4.3-01, Stocks, Stock Options, Bonds, and Mutual Funds (p. 432)
• Freddie Mac Single-Family Seller/Servicer Guide, September 16, 2026 version: 5501.3(b), Securities, retirement accounts and government bonds (p. 5501-19); 5501.2, Reserves (p. 5501-12)
• FHA Single Family Housing Policy Handbook 4000.1, August 12, 2026 version: II.A.4.d.iii(C), Retirement Accounts (TOTAL) (p. 257)
• VA Lender's Handbook (VA Pamphlet 26-7), August 12, 2026 version: Chapter 4, Topic 4.b, Verification of Assets and Cash to Close Requirements (PDF p. 94); Chapter 4, Topic 4.a, Assets and Amount of Cash Required for Closing (PDF p. 94)

Agency guides set the baseline; individual lenders can add stricter overlays. Sources are the guideline versions in Zeitro Strata as of October 29, 2026.