# Foreign Assets Mortgage Rules: Fannie Mae B3-4.2-05 (2026)

> Foreign assets mortgage Fannie Mae rule explained: why money in India must be in a US account in dollars before closing, and the documents that prove it.

Canonical: https://www.masalaloans.com/blog/foreign-assets-mortgage-rules
Author: Apurva Sanghavi
Published: 2026-10-17T19:25:48.548Z
Tags: mortgage, india, Down Payment, conventional loan, home buying

**Quick answer (updated October 2026):** The **foreign assets mortgage Fannie Mae** rule (Selling Guide B3-4.2-05) says money from abroad used for your down payment, closing costs or reserves must be exchanged into US dollars, held in a US or state-regulated financial institution, and verified before closing. Foreign-language documents need full English translations.

Your ₹80 lakh in an HDFC fixed deposit is real money. To your US underwriter, until it lands in a US account in dollars, it isn't usable for closing. That surprises a lot of borrowers who assumed a strong Indian bank statement would be enough.

This post is about the rule itself: what B3-4.2-05 says, what it doesn't say, how lenders apply it, and how to build a timeline around it. If you want the account-specific playbooks, we link to those along the way.

## What Fannie Mae's foreign asset rule says

The topic is short. In plain terms, as of October 2026:

- The lender must **document all sources of funds** used for the down payment, closing costs and financial reserves.

- Foreign assets used as a source of funds must be **exchanged into U.S. dollars** and **held in a U.S. or state-regulated financial institution**, with documented evidence of the exchange.

- The funds must be **verified in U.S. dollars before loan closing**.

- Documents of foreign origin must be in English, or have a **complete and accurate translation** attached.

- **Large deposits** are evaluated under B3-4.2-02.

That's the agency rule. Notice what's missing: no minimum seasoning period for foreign money, no list of approved countries, no ban on gifts from abroad. Those come either from other guide sections or from lender overlays. Same story as visas, where [Fannie Mae has no approved visa list](https://www.masalaloans.com/blog/fannie-mae-no-approved-visa-list) and stricter rules are the lender's own.

## Why "in a US account" matters to lenders

Three practical reasons sit behind the rule:

1. **Verification.** A US lender can verify a US deposit account through standard channels. Verifying an account in Lahore or Kathmandu is slower and harder to rely on.

2. **Exchange-rate risk.** Rupees fluctuate. If you qualify with $100,000 based on today's rate and the rupee weakens before the wire, you could be short at the table.

3. **Availability.** Money stuck behind an overseas bank's compliance review on closing day can't fund your loan.

Once the money is converted and sitting in your US account, the exchange-rate question disappears: the lender uses the dollars you actually have.

## Foreign bank account down payment: what you'll need to show

| **Document** | **What it proves** | **Tips** |
| --- | --- | --- |
| Foreign account statement(s) | The money was yours before it moved | Request statements in English; otherwise get a full translation |
| Outward remittance advice / SWIFT copy | Funds moved through banking channels | Shows rupee debit and dollar credit, which documents the exchange |
| US account statement | Dollars received and held in US institution | The wire should show your name as beneficiary |
| Source of the foreign balance (if recent) | Where a recent big deposit abroad came from | FD maturity letter, sale deed, salary credits |
| Gift letter and donor documents (if a gift) | Funds are a gift, not a loan | Covered separately under the gift rules |

A frequent snag: a big deposit lands in your Indian account weeks before you wire it out. The underwriter sees it on the foreign statement and asks where *that* came from. Keep the chain as short as possible and document each link. On purchases, Fannie Mae requires a single deposit greater than **50% of your monthly qualifying income** to be sourced. Our [large deposit sourcing guide](https://www.masalaloans.com/blog/large-deposit-mortgage-sourcing-rules) shows what a clean explanation looks like.

**Talk to a loan officer who's seen this before:** Before you move a rupee, we'll tell you which documents your lender will want for each account. [Book a free call](https://www.masalaloans.com/contact) with your foreign statements handy.

## Money in India and mortgage reserves

Reserves are the cushion lenders want after closing: often a few months of the new payment, more with multiple financed properties. Can money sitting in India count?

Read the rule closely. B3-4.2-05 opens by covering funds for the down payment, closing costs **and financial reserves**, and then requires foreign assets used as a source of funds to be converted and held in the US. Many lenders therefore require reserves to be in the US as well. Practice varies, and an automated underwriting finding may require fewer reserves than you expect, so ask your loan officer how the specific lender treats it. For FDs, mutual funds and PPF in particular, see [whether Indian FDs and mutual funds can count as reserves](https://www.masalaloans.com/blog/indian-assets-mortgage-reserves).

## Building your timeline around the rule

Working back from your closing date:

| **Weeks before closing** | **Action** |
| --- | --- |
| 8–12 | Inventory foreign accounts; check FD maturity, CA requirements for NRO, any lock-ins |
| 6–8 | Decide amounts; start India-side paperwork; tell your loan officer the plan |
| 4–6 | Wire to your own US account; save every confirmation |
| 2–4 | Lender reviews statements, issues and clears asset conditions |
| Closing week | Wire from your US account to title using verified instructions |

Moving funds before you apply has a side benefit: by the time your lender reviews your statements, the deposit is one documented line instead of a fresh question. That's the logic behind [seasoning money from India](https://www.masalaloans.com/blog/seasoned-funds-from-india).

### A hypothetical example

Say Farhan, a green card holder in Houston, plans to use $60,000 from a Pakistani bank account plus $40,000 in US savings toward a $450,000 purchase. He wires the $60,000 to his US account seven weeks before closing. His lender asks for the Pakistani bank statement (in English), the bank's remittance confirmation, and his US statement showing receipt. Because the funds were converted and verified in dollars well ahead of closing, the asset condition clears in a few days. (Illustration only.)

If his money were in an NRE account in India instead, the process would look similar; see [using NRE account funds for a down payment](https://www.masalaloans.com/blog/nre-account-down-payment).

## What doesn't satisfy the rule

- **A screenshot of your Indian net banking.** Lenders need statements or verifications they can rely on, translated if needed.

- **Funds "available" in India, with a promise to wire later.** They must be verified in dollars before closing.

- **Cash carried in your luggage and deposited.** Hard to document, and unexplained cash deposits are a common reason files stall.

- **Money routed through a friend's US account.** It needs to land in an account in the borrower's name (or follow the gift rules).

Lenders can add overlays on top of B3-4.2-05, such as requiring funds to be in the US by application or asking for longer statement histories. If one lender's overlay doesn't fit your timeline, another lender may not have it.

## What the rules actually say

- **Fannie Mae Selling Guide B3-4.2-05, Foreign Assets (05/04/2022):** all sources of funds for down payment, closing costs and reserves must be documented; foreign assets must be exchanged into U.S. dollars, held in a U.S. or state-regulated institution, and verified before closing; foreign-language documents require translation.

- **Fannie Mae Selling Guide B3-4.2-02:** on purchases, a single deposit greater than 50% of monthly qualifying income must be documented and sourced.

- **Fannie Mae Selling Guide B3-4.2-01 (05/04/2022):** purchase statements must cover the most recent full two-month period of account activity.

- **Freddie Mac** loans follow their own guide; the documentation intent is similar, but confirm specifics with your lender, as of October 2026.

## Frequently Asked Questions

**Q: Can I use money in an Indian bank account for a US mortgage down payment?**<br />A: Yes, but under Fannie Mae B3-4.2-05 it must be converted to US dollars and held in a US or state-regulated financial institution, with the exchange documented and funds verified before closing. You can't close using a balance that's still in India.

**Q: Do foreign bank statements need to be translated for my mortgage?**<br />A: If they aren't in English, yes. Fannie Mae requires a complete and accurate English translation attached to each foreign-language document. Most large Indian banks issue English statements, which avoids the issue.

**Q: Can money in India count toward mortgage reserves?**<br />A: It depends on the lender. Fannie Mae's foreign asset topic covers reserves among the sources of funds it addresses, and many lenders require reserves to be in a US institution. Ask your loan officer how the specific lender treats foreign reserves before you count on them.

**Q: What exchange rate does the lender use for foreign funds?**<br />A: Once the money is converted, the lender uses the US dollar amount that actually arrived in your US account. That's one reason to move funds early: you know exactly how many dollars you have rather than estimating from a rupee balance.

**Q: How early should I transfer money from abroad before closing?**<br />A: Plan for at least four to six weeks before closing, and ideally before you apply. That covers India-side paperwork, wire processing and lender verification. Waiting until closing week is the most common reason foreign-asset files get delayed.

## Get your money-from-India sourcing plan before you sign a contract

Send us a list of where your money sits (India, Pakistan, Bangladesh, Nepal, Sri Lanka or the US) and your target closing month. We'll send back a **money-from-India sourcing plan**: the order to move funds, a week-by-week timeline, and the exact documents each account needs. We shop 150+ wholesale lenders, so if one lender's foreign-asset overlay doesn't fit your timing, we can look elsewhere. Book a free 15-minute call at [/contact](https://www.masalaloans.com/contact), start your application at [/apply](https://www.masalaloans.com/apply), or call 713-366-4668.

*Masala Loans is a brand of Matador Lending, LLC (NMLS #2072896). Written by Apurva Sanghavi, President, NMLS #227127. Equal Housing Opportunity. This article is general education, not tax, legal or immigration advice — consult a qualified CPA, attorney or immigration lawyer for your situation. Program availability, rates and terms vary by lender and borrower and are subject to change; not a commitment to lend.*