Conflicting info-VA Loan Reserves

[Anonymous]

So my VA loan just completed processing and we are about to go into underwriting. My lender has stated that "reserves arent an issue..." and she wrote with paperwork with $7000 in the bank at closing. I will have twice that so I am not worried. However after doing research it seems that I need 6 months PITI in the bank at closing since it is a Jumbo Loan (max in my area $417k). A little information....

Purchase Price-$564,000.

Seller Contributes $6,400 to closing costs.

Closing Costs-$7,000.

No funding Fee.

Locked in at 4%.

Down Payment $37,000.

I own a rental property that is worth $210,000 and I only owe $32,000 (home equity loan). 

I guess the $7,000 covers 2 months as the payments are set to be $2,800. But I have found conflicting info from 0 months, 2 months and 6 months. I just dont want any surprises to come up and if I need 6 months I need to get to work to see if I can make that happen before closing...

[DallasLoanGuy]

i dont do jumbo va so i dont know their rule. but it could just be that you saw a particular lender's guideline overlays.

what did the loan officer say when you asked about what you read?

[Anonymous]

I emailed stating that I found conflicting evidence and I didnt want to have any surprises. 

She said:

"No, there are many factors that come into play with the VA and I am not needing those reserves.

We are very close to underwriting and they'll review it with a fine tooth comb too but I've validated everything thus far and we are good to go. Apprasial just came in and we are good to go."

This is a lender that does a pre-underwriting before I even got my pre approval from them.

[VALoanMaster]

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@Anonymous wrote:

So my VA loan just completed processing and we are about to go into underwriting. My lender has stated that "reserves arent an issue..." and she wrote with paperwork with $7000 in the bank at closing. I will have twice that so I am not worried. However after doing research it seems that I need 6 months PITI in the bank at closing since it is a Jumbo Loan (max in my area $417k). A little information....

Purchase Price-$564,000.

Seller Contributes $6,400 to closing costs.

Closing Costs-$7,000.

No funding Fee.

Locked in at 4%.

Down Payment $37,000.

I own a rental property that is worth $210,000 and I only owe $32,000 (home equity loan). 

I guess the $7,000 covers 2 months as the payments are set to be $2,800. But I have found conflicting info from 0 months, 2 months and 6 months. I just dont want any surprises to come up and if I need 6 months I need to get to work to see if I can make that happen before closing...

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Hi Ashley,

Here is the only time VA requires a specific number of reserves: Rental Income - 

If you're buying a multi-unit property with a VA mortgage -

Verification:  Multi-Unit Property Securing the VA Loan

Verify:

• cash reserves totaling at least 6 months mortgage payments (principal, interest, taxes, and insurance - PITI), and
• documentation of the applicant’s prior experience managing rental units or other background involving both property maintenance and rental.

For SFR rental properties not secured by the VA loan - 

Verification:  Rental of Other Property Not Securing the VA Loan

Obtain the following:

• documentation of cash reserves totaling at least 3 months mortgage payments (principal, interest, taxes, and insurance - PITI), and
• individual income tax returns, signed and dated, plus all applicable schedules for the previous 2 years, which show rental income generated by the property.

[Anonymous]

Thank you Loan Master.

It was weird...the things I was reading were stating that specifically for single family Jumbo VA loans.

I wonder if it was lender overlay...but even then they had it worded that the VA requires the reserves.

Glad to hear that's not the case!