a. Amount of Cash Required The applicant or spouse must have sufficient cash to cover: any closing costs or points which are the applicant’s responsibility and are not financed in the loan, the down payment, if a GPM, and the difference between the sales price and the loan amount, if the sales price exceeds the reasonable value established by VA. VA does not require the applicant to have additional cash to cover a certain number of mortgage payments, unplanned expenses, or other contingencies. However, the applicant’s ability to accumulate liquid assets and the current availability of liquid assets for unplanned expenses should be considered in the overall credit analysis.
b. Verification Requirement Verify all liquid assets owned by the applicant or spouse to the extent they are needed to close the loan. In addition, verify any liquid assets that may have a bearing on the overall credit analysis; that is, significant assets. Use VA Form 26-8497a, Request for Verification of Deposit, as appropriate, OR original or certified true copies of the applicant’s last two bank statements, OR the borrower’s bank statements available to them by Internet or Faxed from the depository directly to the lender. In cases where the lending institution uses Internet based verifications, ensure the URL appears on the document. Verifications must be no more than 120 days old (180 days for new construction). For automatically closed loans, this means the date of the deposit verification is within 120 days of the date the note is signed (180 days for new construction). Continued on next page VA Pamphlet 26-7, Revised Chapter 4: Credit Underwriting 4-28 4. Assets, Continued b. Verification Requirement (continued) For prior approval loans, this means the date of the deposit verification is within 120 days of the date the application is received by VA (180 days for new construction).
c. Pending Sale of Real Estate In some cases, the determination that the income and/or assets of a veteran are sufficient to qualify for the loan depends upon the consummation of the sale of presently owned real property. Sales proceeds may be necessary to make a downpayment or pay closing costs on the VA loan. In addition, the lender may want to consider the amount of equity the applicant has accumulated in the property and the extent to which that equity is attributable to the applicant’s investment rather than the housing market, in evaluating the applicant’s ability to manage assets. The lender may consider any downpayment or costs on the VA loan as provided for by the sale of the property if available information provides a reasonable basis for concluding the equity to be realized from the sale will be sufficient for this purpose. References: See section 4 of chapter 5 for prior approval loans which depend upon the sale of property for the borrower to qualify. See section 6 of chapter 5 for required loan closing documents.
