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.
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.