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FHA Reserves requirements when retaining a property

New Contributor

FHA Reserves requirements when retaining a property

Can anyone clarify for me FHA's requirements for reserves when buying a new home and retaining an exsiting home? We are purchasing a new home and retaining our existing home and converting it to a rental. I've heard conflicting accounts about reserves. The loan officer I'm currently working with has told me I only need 6 months of PITI for the NEW property but not the existing property, but I don't think that's correct and that I need 6 months of PITI for BOTH properties. If anyone can point me in the direction of a HUD/FHA guidance document on this I'd appreciate it.


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Re: FHA Reserves requirements when retaining a property


StihlBilly wrote:
Can anyone clarify for me FHA's requirements for reserves when buying a new home and retaining an exsiting home? We are purchasing a new home and retaining our existing home and converting it to a rental. I've heard conflicting accounts about reserves. The loan officer I'm currently working with has told me I only need 6 months of PITI for the NEW property but not the existing property, but I don't think that's correct and that I need 6 months of PITI for BOTH properties. If anyone can point me in the direction of a HUD/FHA guidance document on this I'd appreciate it.

Hi StihlBilly,

 

FHA only requires 1 month PITI reserves for the rental property on 1 to 2 unit properties per the guidelines. It's possible that the AUS (automated underwriting system) called for more but not likely. I guess it's possible that the 6 month requirement could be a lender overlay. Either way, you may want to look for a new lender.

 

 

 

National Mortgage Banker.
VA Mortgage Expert.
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Contributor

Re: FHA Reserves requirements when retaining a property

Your DU findings will state clearly. Reserve can be in form of 401k also. 

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