ASSETS - Third Cornerstone of Qualifying
Qualifying Asset Types
Assets are used for downpayments, closing costs and reserves.
Bank Accounts
Funds showing in these accounts can be utilized 100%
Investment Accounts
If these are retirement accounts, only vested balances are accepted.
Cash Value Life Insurance
Value that has accumulated can be utilized.
Reserves
Reserves Are Required But Not Utilized
Lenders look for money left over after your purchase is made. Reserves are based on the full housing payment including principle, interest, property taxes, homeowner's insurance and HOA if applicable.
Reserves Are Sourced From Assets
This must be from the borrower's own funds and cannot be a gift.
Lenders Always Require Reserves
This ensures the lender that if income stops temporarily, there are enough reserve assets to continue making the full piti payment.
How Many Months Are Required?
Lenders will factor credit score, down payment amount (LTV) and debt-to-income (DTI) to come up with the reserve requirement, check guidelines.