Do lenders commonly require a certain # of months worth of payments in reserve? We will be cutting it close to save up the rest of the down payment money needed before applying in Feb. I will be right at 50-51% DTI, self employed. 3.5% down FHA and mid mortgage score is 660.
typically FHA does not require reserves - your loan officer will let you know if it is necessary for the type of loan you are getting. Requirements can vary across loan programs
Also 401k, IRA, and HSA accounts can be counted as reserves by many lenders for many loans types
It depends on the loan program and what automated underwriting says. Remember, typically 60% of retirement and investment accounts can be considered reserves as well as long there isn't a clause saying they can't be touched under any circumstance until retirement age (sometimes the case with government employees' retirement accounts).
Unfortunately I do not currently have anything in retirement.