FHA Cash Reserves Requirement

Mortgage and Lending with NMLS# 335055 335055

FHA Cash Reserves Requirement

Did you know that FHA doesn't have a requirement for cash reserves?

That's right.... Not require! You can literally spend your last dollar at the closing table.... although that is not recommended. 

The perception is out there that FHA requires 2 or more months of PITI(principle+interest+taxes+insurance) left over after closing. This is just not the case.

Now, does it help to have some cash reserves after closing? Sure it does!! The automated underwriting engine that scores a loan application and borrower credit will consider reserves as one of the many compensating factors in deciding on approval. A big fat 401K or savings account or stock portfolio makes a borrower a much stronger candidate for approval as they seem less risk of foreclosure.

So, if you have some money that cannot be documented or used for cash reserves.... don't sweat it!! If you are otherwise a strong borrower, you can buy today!!



Tom Burris

Dallas, TX

Dallas Loan Guy      logo

I write about Texas Home Loans , live in the Dallas, TX area and lend across the entire Great State of Texas!!

Your Texas FHA Expert and Dallas Mortgage Expert.


Texas FHA Loans- DallasLoanGuy



Comments (13)

Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

I thought this was so ! You title pulled me in just in case !!!!*L*

Mar 13, 2011 06:12 AM
Matt Odell
GVC Mortgage-Carmel - Carmel, IN
Home Mortgage Specialist with GVC Mortgage-Carmel

Thanks for the post Tom.... 

Aug 15, 2011 06:19 AM
Dave Williamson
Gateway Funding - Winona, MN

Great to know ! Thanks

Aug 29, 2011 06:11 AM
Michael Rohde
Sunstreet Mortgage LLC. Licensed Mortgage Professional - Tucson, AZ

Well you're right, if you want to get over a 50% DTI back end through the DO or DU engine it's much more likely with a couple of months reserves.

Oct 04, 2011 03:15 PM
Ben Gerritsen
Mortgage Miracles Happen, NMLS ID: 1289680 - Ogden, UT
Mortgage Loan Originator

Anytime you have additional compensating factors, the higher the likelihood of getting a higher than 50 DIT approval.  Without having compensating facotrs, the likelihood decreases to have ratios greater than 49.99%

Dec 30, 2011 03:09 PM
Dave Sullivan
Real Estate One - Birmingham, MI
Michigan Realtor with an investor viewpoint

Great to know ! Thanks

Jan 02, 2012 12:42 AM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Tom: Thanks for your knowledge. I appreciate it!

Mar 09, 2012 04:16 AM
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Nov 02, 2015 09:55 PM
Marc DeSantis
Academy Mortgage - Happy Valley, OR
NMLS #590596

There are many misconceptions about FHA loans.  Good reminder for everyone.

Apr 04, 2012 07:29 AM
Brian Quigley - 720-524-3215
The Mortgage Network NMLS#244003 - Denver, CO
COBROKER1 - NMLS#244003 The Mortgage Network

Good Post Tom. Personally I think the conventional route is going to be more beneficial to the homebuyer going forward. All of these increased FHA laws are really sticking it to the borrower. Increased MI for the life of the loan, Increased UPMIP,

Feb 17, 2013 05:19 AM
Tom Burris
NMLS# 335055 - Baton Rouge, LA
Texas/Louisiana Mortgage Pro - 13 YRS Experience

Brian, I try to squeeze every client into Conv.

But FHA is an option


Feb 17, 2013 06:27 AM
Teresa Tims
TDR Mortgage & Real Estate Group - Rancho Cucamonga, CA
Teresa Tims

Thank you for your post Tom :)

Aug 30, 2013 12:37 AM
Tony Busanich
TD Bank - Freehold, NJ

Tom, thanks for the information great to know.

Oct 17, 2013 10:47 PM
Mike Young
203kOnLine.com, covering the USA - Las Vegas, NV
FHA 203k Consultant 916-758-1809

I had always heard there were reserve requirements. Thanks for setting that straight.

Jun 09, 2014 06:40 AM