VA loan & gift money for reserve

[ficonewbie01]

I got a call today and my UW is almost approved with 1 condition. I need to come up with $6K for reserve. The UW already calculated my assets which includes my 401K. My brother can give me the money but does VA loan allow gift money? My LO has told me that the $8K tax credit cannot be used as a reserve.

Thanks

Message Edited by ficonewbie01 on 07-17-2009 08:15 AM

[ShanetheMortgageMan]

So you aren't approved now - but if you are able to get $6k more in an account, to use as "reserves", and not to be used towards closing costs - then you can be approved?  Is that the situation?

Then you are correct, you cannot get a gift to use towards reserves.  You would need to accumulate the reserves, sell someting (and document it properly), etc.   

If you needed to use this as money for your closing costs, then gift funds are permitted.  You'd need to get a gift letter from your brother, a copy of his bank statement showing he has the ability to gift the funds, and then a copy of the cancelled check that would be available after you cash the gift funds.  Or as an alternative to the cancelled check, he can just give a cashier's check directly to the title/closing agent at the closing.

[ficonewbie01]

Correct. I'm asking for a gift money to use as reserves. I do have $3K in cash for emergencies. Can I use that towards the reserve?   

The seller is paying 100% of closing cost.

Message Edited by ficonewbie01 on 07-17-2009 08:27 AM

[Anonymous]

I'm pretty sure cash would need to be deposited and then documented as well. Or anybody could claim they keep a few thousand laying around for emergencies while they're actually having it gifted.

[nathan]

Do you have to have reserves in order to close on a VA loan? This is the first I am hearing this. Is this a Va requirement or is it just a lender requirement. I will be applying for a va loan this fall and I hope they would not be asking me for 6k in reserves after paying closing costs. If seller pays my closing cost, I may have some reserves, but if I have to pay all closing cost, I will left withvery little or nothing. Sorry, I dont mean to hijack your thread, but I am very concerned.

[ficonewbie01]

It sounds like I'm stuck between a rock and a hard place. I don't have $6000 worth of assets to sell. I did that when I was unemployed years ago.. The cash I have on hand is accumulated over period of time.

[ficonewbie01]

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@nathan wrote:
Do you have to have reserves in order to close on a VA loan? This is the first I am hearing this. Is this a Va requirement or is it just a lender requirement. I will be applying for a va loan this fall and I hope they would not be asking me for 6k in reserves after paying closing costs. If seller pays my closing cost, I may have some reserves, but if I have to pay all closing cost, I will left withvery little or nothing. Sorry, I dont mean to hijack your thread, but I am very concerned.

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In my situation, the total amount of my 401K was counted for reserve when the UW was submitted. Unfortunately, only 60% is allowed of the 401K to go towards your reserve. That left me with $6K difference.

Yours may vary depending on the amount of your loan.  For example, If I was asking for a loan of $10-15K less than current loan amount, then this would not have been an issue because the 60% of 401K would have covered the loan reserve. I hope this makes sense for you, as I'm a newbie in all this mortgage stuff!

Message Edited by ficonewbie01 on 07-17-2009 10:48 AM

[Anonymous]

I am very concerned over the reserve issue.  I am looking at buying a new home it is being built priced around $136K.  What do they want to see?  My payment will be around $950 month that will be taxes and insurance.

[brownee]

I'm confused...I thought the VA did not require reserves?

[ficonewbie01]

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@Anonymous wrote:

I am very concerned over the reserve issue.  I am looking at buying a new home it is being built priced around $136K.  What do they want to see?  My payment will be around $950 month that will be taxes and insurance.

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I am guessing they want to see that you have a large seasoned cash reserve. Either from your savings, retirement and investment accounts.