Little Known Fact about FHA Mortgage Reserves

One advantage of an FHA mortgage loan is the ability to deposit cash into your bank account with no need for seasoning. Once the deposit is made, you can get a verification of deposit showing the current balance. Unlike standard conforming mortgage loans, the money does not need to be averaged over 60 days. This is especially important if a borrower is “iffy” in getting an approval.

In some cases, a declined application can get an approval with a good amount of reserves. “Reserves” is the amount of liquid money you have available should you run low on income temporarily. A lender will take the amount of your reserve savings and divide that by the amount of your total monthly house payment. This is the number of months’ reserves they count. Six months or more could help a potentially declined application get an approval.

I share this because sometimes a borrower may have other money that is not deposited in their bank account. But by depositing it in their bank account, they can get credit for the reserves, which also makes the lender feel more comfortable.

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