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Cash reserves?

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Frequent Contributor

Cash reserves?

I have been told  that for FHA we can use 60% of our 401K towards reserves. We have plenty in there to cover that. My question is can we use all of that 401K ( 60%) as reserves or do we need actual CASH in hand plus 401K? For example,  if they are asking for 6 months of reserves which would = $12,000; Could all of that $12,000 be 401K?

 

 I am trying to figure out how much cash in hand we will need in order to close, counting all closing cost and reserves.

 

Thanks!

Jean

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Valued Contributor

Re: Cash reserves?

Yes, you can use your 401k and that can cover all of your reserves. You may need to show terms and eligibility to prove liquidity.

Mortgage Loan Officer licensed in CA & AZ


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Frequent Contributor

Re: Cash reserves?


@dpeezy wrote:

Yes, you can use your 401k and that can cover all of your reserves. You may need to show terms and eligibility to prove liquidity.


Great to know! Thanks!

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