How much should I expect to have in cash reserves if my mortgage is manually underwritten (non-traditional, no credit loan).

I know Freddie Mac, Fannie Mae, and FHA loans all make allowances for non traditional loans for borrowers with no credit history. From what I understand for most single property purchases the base requirement is 1-3 months of PITI but I also know banks will often have their own overlays which can drive up the required reserves. I have heard, anecdotally, that depending on the bank that reserve number may need to be as high as 12-18 months but that seems awfully high.

1 Answer 1


You already have your answer that because it’s non traditional and no credit the reserve requirements can vary and can be quite a bit more. 12-18mo doesn’t sound at all unreasonable for that situation. It depends completely on the business policies of whatever lender you are working with so I don’t think you can get any better answer than the “it varies” that you already have.

I will add though that usually not all of the cash reserve needs to be in literal cash. Portions or even most of it can typically be satisfied by any liquid assets and even less liquid but convertible to cash assets like retirement plans. Something like a traditional IRA would be considered as a reduced amount like 70% of its account balance to adjust for the taxes and penalties you might pay to convert it to cash. A 401k or other age restricted plan might not be considered depending on the lender and circumstances.

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