How do lenders document cash assets?

Cash on Hand refers to cash held by the Borrower outside of a financial institution.  To include Cash on Hand as liquid assets for cash to close or Reserves the Mortgagee must: 

• verify that the Borrower’s Cash on Hand is deposited in a financial institution or held by the escrow/title company. 

• verify and document the Borrower’s Cash on Hand by obtaining an explanation from the Borrower describing how the funds were accumulated and the amount of time it took to accumulate the funds.

• determine the reasonableness of the accumulation based on the time period during which the funds were saved and the Borrower’s:   
- income stream;    
- spending habits;   
- documented expenses; and   
- history of using financial institutions.   

For additional information see Handbook 4000.1 II.A.4.d.iii(B) or II.A.5.c.iii(B) available at

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-04317