FHA Cash Reserves Requirement

By
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
DallasLoanGuy.com

Dallas, TX

http://www.dallasloanguy.com/
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

 

 

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Rainmaker
1,911,676
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 #1
Rainer
26,645
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 #2
Rainer
19,277
Dave Williamson
Gateway Funding - Winona, MN

Great to know ! Thanks

Aug 29, 2011 06:11 AM #3
Rainer
27,091
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 #4
Rainer
123,223
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 #5
Rainer
225,394
Dave Sullivan
Real Estate One - Birmingham, MI
Michigan Realtor with an investor viewpoint

Great to know ! Thanks

Jan 02, 2012 12:42 AM #6
Ambassador
687,288
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

Tom: Thanks for your knowledge. I appreciate it!

Mar 09, 2012 04:16 AM #7
Rainer
27,798
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 #8
Rainer
45,349
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 #10
Rainmaker
536,260
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 #11
Rainmaker
50,287
Teresa Tims
TDR Mortgage & Real Estate Group - Rancho Cucamonga, CA
Teresa Tims

Thank you for your post Tom :)

Aug 30, 2013 12:37 AM #12
Rainmaker
56,229
Tony Busanich
TD Bank - Freehold, NJ
1-4 RESIDENTIAL FAMILY LENDING SPECIALIST

Tom, thanks for the information great to know.

Oct 17, 2013 10:47 PM #13
Rainmaker
618,296
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 #14
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Rainmaker
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Tom Burris

Texas/Louisiana Mortgage Pro - 13 YRS Experience
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