I'm new to the whole house-buying thing - my husband and I are hoping to buy a house in the near-ish future, if at all possible. I keep reading about the importance of cash reserves, but can't find any information as to how much would be regarded as enough/not enough/great/bad/etc. I've seen a few posts on here talking about how many months reserves people have - does that mean X months salary (each, if we're talking about a couple?), X months PITI, or... something else?
Our situation is that we are hoping to buy something in the region of $150,000. Until a couple of weeks ago we had a little over $20,000 in savings and were planning on using around $15,000 as a 10% down payment. After a very expensive car-needing-a-new-engine incident, our savings account now contains a mere $13,500 - as we had no choice but to deplete our savings to fix the car, I withdrew about an extra $1000 to pay down some of our credit cards, reduce our % utilization quite considerably, and hopefully see a positive upswing in the FICO scores once the credit cards report the new balances.
Of course, that leaves us far short of a 10% down payment! We had arranged to meet with a loan officer from our bank just before the 'car incident' happened - when we explained the situation, he suggested putting 5% down instead of 10% - we were also talking about ways of minimizing closing costs (such as offering full asking price on a property but asking the seller to pay closing). Now I'm thinking about the whole 'cash reserves' thing. Assuming a down payment of $7500, that would leave $6000 in the account.
Sorry for the long thinking-out-loud post, but I've spent so much time fixating over our FICO scores, our DTI, blah blah blah... but hadn't really considered how much a lender might NEED to see in reserves (or what that even means!) when deciding whether or not to approve us for a mortgage. So any clarification anyone would offer would be very gratefully received!
