What money can I use for a down payment?
Most programs accept money from several places, and you can combine them:
- Savings and checking accounts in your name
- Gift funds from family, documented with a Gift letter A signed letter from the person giving you money toward your purchase, stating it's a gift that doesn't have to be repaid. See the full glossary
- Vested money in a 401(k), IRA or similar account, withdrawn or borrowed against
- Proceeds from selling your current home or something else you own, like a car or boat
- Down payment and closing cost assistance, such as NH Housing's programs
- Stocks, bonds or cryptocurrency, once sold and moved into a bank account
- The earnest money you already paid, which counts toward your money in
What doesn't work is money you can't document, or a loan that isn't secured by your own assets and isn't counted in your debts. Tom can tell you early which of your sources your program accepts.
Can I use my 401(k) or IRA for a down payment?
Yes. Fannie Mae accepts vested funds in a 401(k), IRA, SEP or Keogh account for the down payment, closing costs and reserves. The lender confirms the account is yours, that it's vested and that you can withdraw the money. You have two main ways to use it:
- Borrow against it. A loan secured by your own 401(k) is an accepted source. When a loan is secured by your financial assets, Fannie Mae doesn't require the payment to be counted as a monthly debt, though the account's value is reduced if you also use it for reserves.
- Withdraw it. An early withdrawal can mean income tax and an early-withdrawal penalty. IRAs have a first-time homebuyer exception to the penalty, with a lifetime limit. Talk with a tax adviser before you withdraw.
If you only need the account for reserves, the money usually doesn't have to leave the account at all.
What is a large deposit, and why does the lender ask about it?
For conventional loans, Fannie Mae defines a large deposit as a single deposit that's more than half of your total monthly qualifying income. On a purchase, if you're using that money to close, the lender has to document where it came from. A paycheck or tax refund that the bank statement already labels is fine on its own. For anything else, expect a short letter and proof, such as a gift letter, a bill of sale or a transfer statement from your other account.
If a large deposit can't be documented, the lender leaves it out of your verified funds, so the rest of your money has to cover what you need.
How long does money need to be in my account?
Lenders usually review your most recent two months of statements. Money that's been sitting in your account through those statements, with no large deposits to explain, is the simplest to use. If you're moving money around before you buy, do it early, keep every statement, and don't move cash in and out of accounts without a paper trail.
Can I use crypto or stocks for my down payment?
Yes, once they're sold. Fannie Mae accepts cryptocurrency that's been exchanged into U.S. dollars and held in a U.S. or state regulated financial institution, as long as you document the exchange and the funds are verified in dollars before closing. Crypto can't be used directly for the Earnest money A deposit you make when your offer is accepted to show the seller you're serious. It's usually credited toward your cash to close. See the full glossary deposit. Stocks, bonds and mutual funds work the same general way: show the account, then the sale and the deposit.
What about cash I keep at home?
Cash that has never been in a bank account is hard for a lender to verify. If you have some, tell Tom before you deposit it. Depositing it well before you apply and keeping a record of where it came from makes it much easier to use, and some programs have their own rules for it.
Can the seller help with my down payment?
No. A seller can't give you the down payment, but a seller credit can help with closing costs and prepaid items, within each program's limits. See seller credits and rate buydowns.
What should I gather?
- Two months of statements, all pages, for every account you'll use
- A gift letter and the donor's transfer record, if family is helping
- Your 401(k) or IRA statement and any loan or withdrawal paperwork
- A bill of sale and deposit record for anything you sold
- Exchange and transfer records for crypto or stock you sold
Not sure which applies? The document checklist builds your list.
Tools for this topic: Affordability calculator · Payment calculator
Sources
- Fannie Mae Selling Guide B3-4.2-02, Depository Accounts (large deposits)
- Fannie Mae Selling Guide B3-4.3-03, Retirement Accounts
- Fannie Mae Selling Guide B3-4.3-15, Borrowed Funds Secured by an Asset
- Fannie Mae Selling Guide B3-4.1-04, Virtual Currency
- IRS Topic 557, Additional tax on early distributions
Checked October 2026. Limits and program rules change, so confirm current figures 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.