Purchasing A Home - Q&A with H&Co

Post-Closing Liquidity

Q: Regarding post-purchase liquidity, what is a good number either dollar or %? I have some cash tied up in shares/Roth IRA that I could pull on if needed. Would I need to draw on it or is it alright to leave but show them?

H&Co: That will vary from one institution to the next. They'll look at your (combined) income and ability to rebuild your savings. Also tied to whether the lender will keep the loan in-house or package and sell to another lender or secondary market. I've seen as low as 2 months but I'd encourage at least 6 months of cushion and encourage you to methodically save until you have 12 months of reserves at the ready (even if the lender asks for less). Banks also differ in liquidity definitions. Some banks (e.g., Chase, Wells Fargo) will allow their customers to show liquid assets that are held by the bank's investment arm but not truly liquid at the time of application and/or closing.