How much reserves are needed for a home loan?
March 7, 2007 | Mortgage | 
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When applying for a mortgage one thing you will be asked for is reserves. This is the amount of cash left after your purchase, or before your refinance.
As with all lending criteria, the more you can validate..the better rate you will get. Reserves are an important part of this picture and here is how they are calculated. Lenders will determine how many months of mortgage principle, interest, property taxes, home insurance, and home owners association dues you have in reserve and base your qualifications on this. It does not matter if you pay your taxes every 6 months or if it is part of the payment. They will determine how much each of these are on a monthly basis and each of these are included when making this determination.
“A” paper lenders require anywhere from 2 months - 6 months in payment reserves. As with all qualifying criteria, there are programs that overlook this but this will mean a higher rate and/or lower loan amounts permitted.
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