What we verified in “Tandas and savings clubs: how they count for your mortgage”

Statements and where we checked them

The statements with rules, figures or dates, with the exact place in the source and the date we checked them.

1. On an FHA loan, a private savings club is a non-traditional method of saving by making deposits into a member-managed resource pool; the lender may consider club funds that were distributed to and received by the borrower as an acceptable source of funds; it must verify and document the establishment and duration of the club and the borrower's receipt of funds from it; it must determine that the funds were reasonably accumulated and not borrowed; and it must obtain the club's account ledgers and receipts and a verification from the club treasurer that the club is still active.

   Sources 1 · HUD Handbook 4000.1 (last revised 8/12/2026), II.A.4.d.iii(E), Private Savings Clubs (TOTAL): 'a non-traditional method of saving by making deposits into a member-managed resource pool'; 'The Mortgagee may consider Private Savings Club funds that are distributed to and received by the Borrower as an acceptable source of funds'; 'The Mortgagee must verify and document the establishment and duration of the club, and the Borrower's receipt of funds from the club'; 'reasonably accumulated, and not borrowed'; 'The Mortgagee must obtain the club's account ledgers and receipts, and a verification from the club treasurer that the club is still active' · Checked October 17, 2026

2. On an FHA loan, if the borrower is obligated to keep making contributions to the savings club, that obligation must be counted in the borrower's total debt; the lender must verify and document how long the borrower has been a member and the required contribution, and obtain the club's ledgers and receipts and a verification from the treasurer that the club is still active.

   Sources 1 · II.A.4.b.iv(O), Private Savings Clubs (TOTAL): 'If the Borrower is obligated to continue making ongoing contributions under the pooled savings agreement, this obligation must be counted in the Borrower's total debt'; 'the establishment and duration of the Borrower's membership in the club and the amount of the Borrower's required contribution to the club'; 'The Mortgagee must also obtain the club's account ledgers and receipts, and verification from the club treasurer that the club is still active' · Checked October 17, 2026

3. On an FHA loan, the lender may only consider assets derived from acceptable sources, must document all funds used to qualify for or close the mortgage, and must verify that the borrower has sufficient funds from an acceptable source to close.

   Sources 1 · II.A.4.d.i, General Asset Requirements (TOTAL): 'The Mortgagee may only consider assets derived from acceptable sources'; (B) Cash to Close: 'The Mortgagee must document all funds that are used for the purpose of qualifying for or closing a Mortgage'; 'sufficient funds from an acceptable source to facilitate the closing' · Checked October 17, 2026

4. On an FHA loan, cash on hand is cash held outside a financial institution; the lender must verify that it is deposited in a financial institution or held by the escrow/title company, get the borrower's explanation of how and over what time it was accumulated, and judge whether that is reasonable given the borrower's income, spending habits and history of using financial institutions.

   Sources 1 · II.A.4.d.iii(B), Cash on Hand (TOTAL): 'Cash on Hand refers to cash held by the Borrower outside of a financial institution'; 'is deposited in a financial institution or held by the escrow/title company'; 'describing how the funds were accumulated and the amount of time it took to accumulate the funds'; 'determine the reasonableness of the accumulation'; 'income stream'; 'spending habits'; 'history of using financial institutions' · Checked October 17, 2026

5. On an FHA loan, the lender must obtain documentation of any individual deposit of more than 50 percent of the borrower's total monthly income, and verify that deposits are in line with the borrower's income and savings history.

   Sources 1 · II.A.4.d.iii(A), Checking and Savings Accounts (TOTAL): 'For individual deposits of more than 50 percent of the total monthly Effective Income, the Mortgagee must obtain documentation of the deposits'; 'verify that the deposits are commensurate with the' · Checked October 17, 2026

6. On an FHA loan, the Minimum Required Investment (MRI) is the borrower's contribution in cash or its equivalent, of at least 3.5 percent of the property's Adjusted Value.

   Sources 1 · II.A.2.c.ii, Minimum Required Investment: 'refers to the Borrower's contribution in cash or its equivalent'; 'at least 3.5 percent of the Adjusted Value of the Property' · Checked October 17, 2026

7. For Fannie Mae, funds from a community savings account or any other type of pooled savings may be used for the down payment if the borrower can document regular contributions; acceptable documentation includes written confirmation from the party managing the fund and documentation of regular contributions; and an obligation to keep contributing counts as part of the borrower's debt in the total debt-to-income ratio.

   Sources 2 · Selling Guide B3-4.2-04, Pooled Savings (Community Savings Funds) (04/01/2009): 'Funds from a community savings account or any other type of pooled savings may be used for the down payment if the borrower can document regular contributions to the fund'; 'written confirmation from the party managing the pooled savings fund and documentation of regular borrower contributions'; 'must be considered as part of the borrower's debt when calculating the total debt-to-income ratio' · Checked October 17, 2026

8. For Fannie Mae, unverified funds are not acceptable for the down payment, closing costs or financial reserves, and the lender must investigate any indications of borrowed funds.

   Sources 3 · Selling Guide B3-4.2-02, Depository Accounts (12/14/2022): 'Unverified funds are not acceptable for the down payment, closing costs, or financial reserves'; 'The lender must investigate any indications of borrowed funds' · Checked October 17, 2026

9. For Fannie Mae, a large deposit is a single deposit that exceeds 50% of the total monthly qualifying income; when bank statements (typically covering the most recent two months) are used, the lender must evaluate large deposits; on a purchase, if the funds are needed, the lender must document that they come from an acceptable source; when documentation is missing, the lender must use reasonable judgment, and the borrower's written explanation is an example of acceptable documentation; and verified funds must be reduced by any undocumented portion.

   Sources 3 · B3-4.2-02, 'Evaluating Large Deposits': 'A large deposit is defined as a single deposit that exceeds 50% of the total monthly qualifying income for the loan'; 'typically covering the most recent two months'; 'the lender must document that those funds are from an acceptable source'; 'the lender must use reasonable judgment based on the available documentation'; 'the borrower's written explanation'; 'Verified funds must be reduced by the amount (or portion) of the undocumented large deposit' · Checked October 17, 2026

10. For Fannie Mae, on a purchase the bank statements must cover the most recent full two-month period of account activity.

    Sources 4 · Selling Guide B3-4.2-01, Verification of Deposits and Assets (05/04/2022): 'Purchase transactions'; 'The statements must cover the most recent full two-month period of account activity' · Checked October 17, 2026

11. For Fannie Mae, cash-on-hand is not an acceptable source of funds for the down payment or closing costs, except on HomeReady loans.

    Sources 5 · Selling Guide B3-4.3-20, Anticipated Savings and Cash-on-Hand (04/01/2009): 'Cash-on-hand is not an acceptable source of funds for the down payment or closing costs'; 'For HomeReady mortgages, cash-on-hand may be considered an acceptable source of funds for the down payment and closing cost' · Checked October 17, 2026

12. On a Fannie Mae HomeReady loan for a one-unit home, cash-on-hand may be used for the down payment, closing costs and prepaids but not for reserves; the lender must verify that the borrower customarily uses cash for expenses, that the funds are in a financial institution account or an acceptable escrow account at the time of application or no less than 30 days before closing, and must obtain the borrower's written statement disclosing the source of funds and stating that they were not borrowed.

    Sources 6 · Selling Guide B5-6-02, HomeReady Mortgage Underwriting Methods and Requirements (11/05/2025), 'Cash-on-Hand': 'purchase money mortgages for one-unit properties with cash-on-hand as an acceptable source of funds'; 'Cash-on-hand may not be used to fund the borrower's reserve requirement'; 'The borrower customarily uses cash for expenses'; 'exist in a financial institution account or an acceptable escrow account'; 'Funds must be on deposit at the time of application, or no less than 30 days prior to closing'; 'a written statement from the borrower that discloses the source of funds and states that the funds have not been borrowed' · Checked October 17, 2026

13. Under Regulation Z, to decide whether you can repay, the lender must consider, among other things, your current debt obligations, and must verify the income or assets it relies on using third-party records that provide reasonably reliable evidence; financial institution records are one example.

    Sources 7 · 12 CFR §1026.43(c)(2)(vi) ('The consumer's current debt obligations, alimony, and child support') and (c)(4) ('using third-party records that provide reasonably reliable evidence of the consumer's income or assets'; 'Financial institution records') · Checked October 17, 2026

14. The CFPB suggests gathering your two most recent bank statements and documentation of the source of your down payment, such as statements showing at least two months' history of ownership; warns that lenders may reject incomplete documents; and says requirements vary from lender to lender and depending on your situation.

    Sources 8 · Create a loan application packet: 'Bank statements, two most recent'; 'Documentation of the source of your down payment'; 'showing at least two months' history of ownership'; 'If your documents are incomplete, lenders may reject them'; 'Requirements vary from lender to lender and depending on your specific situation' · Checked October 17, 2026

15. According to FinCEN, federal law requires financial institutions to report cash transactions over $10,000, or several that add up to more than that in a single day, on a Currency Transaction Report (CTR); there is no general prohibition against handling large amounts of cash and the report is filed regardless of the reason; and it is a crime to break up transactions into smaller amounts to evade the report.

    Sources 9 · Notice to Customers: A CTR Reference Guide: 'report currency (cash or coin) transactions over $10,000'; 'aggregate to be over $10,000 in a single day'; 'These transactions are reported on Currency Transaction Reports (CTRs)'; 'There is no general prohibition against handling large amounts of currency'; 'the filing of a CTR is required regardless of the reasons for the currency transaction'; 'Federal law makes it a crime to break up transactions into smaller amounts for the purpose of evading the CTR reporting' · Checked October 17, 2026

16. According to the FDIC, deposit insurance protects your money in deposit accounts at FDIC-insured banks if the bank fails, to at least $250,000 per depositor, per ownership category, at each insured bank; safe deposit boxes and their contents are not covered.

    Sources 10 · Understanding Deposit Insurance: 'FDIC deposit insurance protects your money in deposit accounts at FDIC-insured banks in the event of a bank failure'; 'insuring deposits to at least $250,000 per depositor, per ownership category at each FDIC-insured bank'; 'Safe deposit boxes or their contents' · Checked October 17, 2026

17. Freddie Mac says that, typically, you should be prepared to pay between 2% and 5% of the home purchase price in closing costs.

    Sources 11 · What Are Closing Costs and How Much Will I Pay?: 'Typically, you should be prepared to pay between 2% and 5% of the home purchase price in closing fees.' · Checked October 17, 2026

18. HUD-approved housing counselors give independent advice on buying, renting, defaults and credit, often at little or no cost.

    Sources 12 · Find a Housing Counselor: 'Housing counselors throughout the country can provide advice on buying a home, renting, defaults, forbearances, foreclosures, and credit issues'; 'they can offer independent advice, often at little or no cost to you' · Checked October 17, 2026