Jan 6, 2026 2026-01
HUD Decreases Passbook Savings Rate – Asset Test Affected
Dear Participating Lenders:
The U.S. Department of Housing and Urban Development (HUD) announced a decrease to the Passbook Savings Rate. Please take note that an Asset Test must be performed for households in which the cash and cash equivalent assets exceed $5,000 for all FirstHome loans.
As a reminder, an asset is defined as an item of value that may be turned into cash, like a savings account. Because interest is earned on these accounts, the interest income is income that must be counted toward household income. Examples include but aren't limited to the following: checking, savings, broker accounts, and IRAs.
On January 1, 2025, HUD increase the imputed passbook savings rate to .45%. As of January 1, 2026, HUD has decreased the passbook savings rate to .40%. Housing New Mexico will begin calculating income using the new passbook savings rate of .40% with loans reviewed Tuesday, January 06, 2026. Housing New Mexico always wants to put forth its best efforts to assist borrowers but must follow Internal Revenue Service (IRS) and Bond Counsel guidance. Unfortunately, not all applicants will meet program guidelines once an Asset Test is performed.
The annual household income must include the greater dollar amount of the actual yearly income, or the percentage of the assets based on the current 0.40% passbook savings rate.
In this example, cash assets equal $9,455, which is greater than $5,000. Therefore, it is necessary to compare the actual yearly income from assets to the imputed income from assets.
· Imputed income calculation- The total cash value of assets ($9,455) is multiplied by 0.40% to determine the imputed income from assets. (0.40/100) =0.0040 x $9,455 = $37.82. Since $150 (actual income) is greater than the imputed income from assets ($37.82), $150 would be used in the income calculation. Please note these figures are already annualized.
Should you have any questions, please contact a Housing New Mexico | MFA homeownership representative at 505.843.6880 or by email: singlefamily@housingnm.org.
Thank you for participating in Housing New Mexico’s programs.
