source:
  type: guide
  id: va-m26-7-ch04-t04
  authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 4, Topic 4 — Assets and
    Closing Requirements
  description: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 4, Topic 4 — Assets
    and Closing Requirements.
  coverage_tier: operative
obligations:
- id: va-m26-7-ch04-t04-full
  canonical_id: va-m26-7-ch04-t04-full
  section: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 4, Topic 4 — Assets and
    Closing Requirements
  type: do
  tags:
  - regulator-direct
  - va
  - va-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 4, Topic 4 — Assets
      and Closing Requirements
    source_class: va-handbook
    source_url: https://www.benefits.va.gov/warms/pam26_7.asp
    snapshot_id: 84a199d5bffee03b
    fetched_at: '2026-05-23T01:53:52Z'
    content_hash: sha256:ed2c25537e999a4e2d8f0edd102b19b58213237b1a9caa927fddfca170b14a9c
    paragraph_quote: '4. Assets and Closing Requirements Change Date a. Assets and
      Amount of Cash Required for Closing February 22, 2019 • This chapter has been
      revised in its entirety. The borrower(s) must have sufficient cash assets to
      cover: • any closing costs, pre-paids, or discount points which are the borrower’s
      responsibility and are not financed into the loan, and • the difference between
      the sales price and the loan amount, if the sales price exceeds the reasonable
      value established by VA (i.e. negative equity). VA does not require the borrower(s)
      to have additional cash to cover a certain number of mortgage payments, unplanned
      expenses or other contingencies on the residence, or refinance of the Veteran’s
      residence. However, the borrower’s ability to accumulate liquid assets and the
      current availability of liquid assets for unplanned expenses should be considered
      in the overall credit analysis. Reserves are required for borrowers using rental
      income to qualify. See Topic 2, subsection n of this chapter for more information.
      A rental offset does not require additional assets to cover PITI. See Topic
      2, subsection n of this chapter for more information. The assets securing a
      loan(s) against deposited funds (signature loans, cash value life insurance
      policies, 401(k) loans, other) may not be included as an asset on the VA Form
      26-6393, Loan Analysis. See Topic 5 of this chapter for more information. Continued
      on next page VA Pamphlet 26-7, Revised Chapter 4: Credit Underwriting 4-36 4.
      Assets and Closing Requirements, continued b. Verification of Assets and Cash
      to Close Requirements Verify all liquid assets owned by the borrower(s) 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 (significant assets).
      Use VA Form 26-8497a, Request for Verification of Deposit, or electronic, or
      certified copies of the borrower’s last two bank statements. Verifications must
      be no more 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). 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 borrowers are needed to qualify for the loan depends upon the
      sale of presently the borrower’s owned real property. The sale proceeds may
      be necessary to: • clear the outstanding mortgage(s) against the property, •
      pay outstanding consumer obligations, • make a downpayment or pay closing costs
      on the VA loan, and/or • restore previously used VA entitlement. Evidence the
      sale has been completed should be included in the closing package to verify
      proceeds from the sale. As an alternative, the Veteran may sell the property
      with the buyer assuming the outstanding mortgage obligation. See Chapter 6 of
      this handbook for assumptions (Release of Liability) with a Substitution of
      Entitlement to restore previously used entitlement. See Chapter 5 of this handbook
      for prior approval loans, which depend upon the sale of property for the borrower
      to qualify. See Chapter 5 of this handbook for all required loan closing documents.
      Continued on next page VA Pamphlet 26-7, Revised Chapter 4: Credit Underwriting
      4-37 4. Assets and Closing Requirements, continued d. Gift Funds A gift can
      be provided by a donor that does not have any affiliation with the builder,
      developer, real estate agent, or any other interested party to the transaction.
      A gift letter must: • specify the dollar amount of the gift, • include the donor’s
      statement that no repayment is expected, and • indicate the donor’s name, address,
      telephone number, and relationship to the borrower. The lender must verify that
      sufficient funds to cover the gift have been transferred to the borrower’s account,
      or will be documented as received by the closing agent at the time of closing.
      Acceptable documentation includes the following: • evidence of the borrower’s
      deposit, • a copy of the donor’s funds by check/electronic transfer to the closing
      agent, or • the CD showing receipt of the donor’s funds. VA Pamphlet 26-7, Revised
      Chapter 4: Credit Underwriting 4-38'
  judgment: false
