Short answer
Yes. On a Fannie Mae loan, the net money from a loan against your policy's cash value, or from cashing in the policy, can go toward your down payment, closing costs and reserves. If the only penalty for not repaying the policy loan is losing the policy, the loan payment doesn't count in your debt-to-income ratio. For reserves, the cash value only needs to be documented, not withdrawn.
What will the lender need?
- A policy statement showing the cash value.
- If you're using the money to close, a copy of the insurer's check or payout statement showing you received it.
- The policy loan terms, so the lender can see whether repayment is required.
Will a policy loan hurt my qualifying?
Often not. If the policy loan has no required payments beyond the risk of losing the policy, Fannie Mae doesn't count it as a debt. If the terms add other obligations, the lender either counts the payment or subtracts it from your reserves.
What should I think about first?
Borrowing against or cashing in a policy can lower the death benefit, and cashing in may have tax effects or surrender charges. Ask your insurance agent and a tax adviser before you decide. Tom can show how the money fits into your loan plan.
Can it just count as savings?
Yes, as reserves. Some loans require money left over after closing, and documented cash value can count without being withdrawn. See reserves for investment property and where your down payment can come from.
Sources
Checked November 2, 2026. Rules and dates change, so confirm current details before you rely on them.
General information only, not tax or legal advice. Program availability, eligibility and terms vary by lender and are subject to change and to underwriting approval. Not a commitment to lend.