cancel
Showing results for 
Search instead for 
Did you mean: 

Reserve Funds Required for FHA Loan

tag
Creditfox
Established Member

Reserve Funds Required for FHA Loan

I was recently told that FHA requires you to have 3 months of mortgage payments in reserve (I assume in a savings account of some sort) to secure an FHA mortgage.  The reserve is in addition to the 3.5% down payment.

 

I totally agree with the concept of having reserve funds available in case of an emergency.  And, I will have funds on reserve.  My only questions is whether or not this is a hard FHA requirement - I have never heard of this until last weekend while house hunting.

 

First, is this true?  And second, can your 401K serve as proof reserve.

 

Thanks 

Message 1 of 13
1 ACCEPTED SOLUTION

Accepted Solutions
Anonymous
Not applicable

Re: Reserve Funds Required for FHA Loan

In November I was told by an LO that I don't need reserves for an FHA loan.  While it's possible that's changed in the last 5 months, it might be more possible that the requirement to have reseves is something that the lender you spoke with is requiring. 

 

Lenders can add requirements to an FHA loan above what the government has set forth.  For example, ther is no FICO score requirment for an FHA loan, but you'll be hard pressed to find a lender who will do an FHA mortgage loan for a mid score that's lower than 620.  That's not an FHA requirment, but a lender's requirement.

Message 7 of 13
12 REPLIES 12
Anonymous
Not applicable

Re: Reserve Funds Required for FHA Loan

I have always heard that reserves make a stronger file, but have not yet heard anything about it being a requirement of FHA. As far as I know, your 401k is considered reserves so long as you can access it.
Message 2 of 13
Anonymous
Not applicable

Re: Reserve Funds Required for FHA Loan

I was just approved for an FHA loan and was never told naything about having reserves.
Message 3 of 13
Anonymous
Not applicable

Re: Reserve Funds Required for FHA Loan

I've not been told such either, I was preapproved nearly a month ago.

Message 4 of 13
Creditfox
Established Member

Re: Reserve Funds Required for FHA Loan

Thanks.  I have never heard of this before.  And, I suspected that this was not true.
Message 5 of 13
Creditfox
Established Member

Re: Reserve Funds Required for FHA Loan

Good info.  Thanks.  This board is awesome for weeding out bad info...
Message 6 of 13
Anonymous
Not applicable

Re: Reserve Funds Required for FHA Loan

In November I was told by an LO that I don't need reserves for an FHA loan.  While it's possible that's changed in the last 5 months, it might be more possible that the requirement to have reseves is something that the lender you spoke with is requiring. 

 

Lenders can add requirements to an FHA loan above what the government has set forth.  For example, ther is no FICO score requirment for an FHA loan, but you'll be hard pressed to find a lender who will do an FHA mortgage loan for a mid score that's lower than 620.  That's not an FHA requirment, but a lender's requirement.

Message 7 of 13
Anonymous
Not applicable

Re: Reserve Funds Required for FHA Loan

From personal experience, our 401Ks were used towards our reserves- not sure if they used 100% of our 401ks or just the amount we could borrow from them.
Message 8 of 13
DallasLoanGuy
Super Contributor

Re: Reserve Funds Required for FHA Loan

fha does not require cash reserves, period 

Retired Lender
Message 9 of 13
Anonymous
Not applicable

Re: Reserve Funds Required for FHA Loan

Like Dallas said, FHA does not require reserves but an individual lender can and often will.  That said, if the file is borderline due to credit issues, dti or anything, reserves go a LONG way to getting an approval.
Message 10 of 13
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.