Duane Buziak, NMLS #1110647
Consider a Glen Allen buyer purchasing a $650,000 home with 20% down and a $520,000 non-QM loan. At an illustrative 7.75% fixed rate for 30 years, principal and interest is about $3,725 per month. Add an estimated $433 for Henrico County real estate taxes and $150 for homeowners insurance, and the estimated PITI payment is $4,308. If the program calls for 12 months of reserves, the buyer needs $51,696 remaining after closing. A quote at 7.50% would reduce principal and interest to roughly $3,635 – a $90 monthly difference, or $5,400 over five years before considering balance reduction. That is why reserve requirements for non QM financing deserve attention before a home search gets serious.
For a buyer in Short Pump, Wyndham, Innsbrook, or Glen Allen proper, reserves can be the difference between a workable non-QM file and a last-minute request for more documented assets. They are not a fee paid to the broker. They are funds you still own after the down payment and closing expenses, held in verified accounts to show that you can sustain the housing payment if income fluctuates.
Table of Contents
- What non-QM reserves are and why they matter
- How to calculate required reserves
- Assets that may count
- Local market context for Glen Allen buyers
- How a mortgage broker reviews options
- Frequently asked questions
What Reserve Requirements for Non QM Mean
Non-QM, or non-qualified mortgage, programs are built for borrowers whose income, property type, or credit profile may not fit conventional agency guidelines. A self-employed buyer may use bank statements. An investor may qualify with debt service coverage ratio income. A buyer with a recent credit event may have an option after meeting program-specific waiting periods.
Because these files can use alternative documentation, reserve requirements are often more meaningful than they are on a standard conventional loan. The requirement is generally measured in months of PITI. Depending on the property, loan amount, credit profile, down payment, and documentation type, a program may ask for as little as three months or as much as 12 months or more.
There is no single non-QM reserve rule. A primary residence with strong credit, substantial equity, and full documentation may receive a lower reserve requirement than a second home, an investment property, or a larger-balance loan. A $520,000 loan can have a very different reserve calculation from a $900,000 loan, even when the buyers have similar incomes.
Calculate reserves using PITI, not just the mortgage payment
Use the complete monthly housing payment: principal, interest, property taxes, homeowners insurance, and any required association dues when the program includes them. In the example above, six months of $4,308 PITI equals $25,848. Twelve months equals $51,696. Those balances must normally remain available after the buyer brings the down payment and closing funds to settlement.
Closing costs are separate from reserves. On a $520,000 purchase loan, a planning range of 2% is $10,400, although the final number depends on title work, escrows, prepaid insurance, appraisal, and loan structure. Ask about our no-out-of-pocket closing options when appropriate. Also, Glen Allen Mortgage’s preferred title company can save an additional $2,000 on average, a meaningful offset to transaction costs, but it does not replace reserve funds.
Which Assets Can Count Toward Non-QM Reserves?
Cash in checking, savings, money market accounts, and many brokerage accounts is usually the cleanest form of reserve documentation. Retirement funds may count at a reduced percentage depending on the program. A 401(k) balance of $80,000, for example, may not be credited dollar-for-dollar because access and possible tax consequences must be considered.
Large deposits require a clear paper trail. If a borrower transfers $30,000 from a business account, receives a gift, sells an asset, or moves funds between institutions, the statements should tell a complete story. The goal is not to make documentation burdensome. It is to ensure the assets are eligible, sourced, and still available after closing.
For self-employed applicants, separating business operating cash from personal reserves early is wise. Some programs permit business assets, but the review may consider the business’s ongoing obligations. A broker can identify this issue before a contract deadline turns it into a problem.
Local Numbers Matter in Henrico County
Reserve planning is especially relevant in the Glen Allen market because price points vary sharply by neighborhood and school zone. Redfin reported a Henrico County median sale price of approximately $390,000 in May 2024. Source: Redfin Henrico County housing market data. In higher-priced areas around Wyndham, River Mill, and parts of Short Pump, buyers can encounter larger loan amounts and correspondingly larger PITI reserve calculations.
Inventory and competition also change the conversation. Well-maintained homes near sought-after school zones can still draw quick interest, while buyers may find more negotiation room on properties that need updating or have been listed longer. When a buyer is using bank-statement or DSCR financing, proving reserves before making an offer can help the financing side move with the same discipline as a conventional offer.
For perspective, the 2025 baseline conforming loan limit was $806,500 for a one-unit property in most U.S. counties. Buyers above that range, buyers using alternative income, and investors often need a more specialized review. Credit also matters: many non-QM programs begin around 620 FICO, while stronger pricing and lower reserve expectations often appear at 680, 700, or 720-plus, depending on the program.
Broker-Guided Review Versus a Single Program Shelf
A local mortgage broker can compare program structures rather than forcing every file into one underwriting approach. The right choice is not always the program with the lowest advertised rate. A slightly higher rate with an achievable reserve requirement may be more useful than a quote that looks attractive but requires assets the borrower cannot document.
| Review dimension | Broker-guided non-QM review | Single-program desk |
|---|---|---|
| Broker access | Can review multiple non-QM program structures | Limited to the programs offered on one shelf |
| FICO floors | May compare options beginning near 620 FICO | Floor varies by that program’s guidelines |
| Program breadth | Bank statement, DSCR, foreign national, jumbo, and other eligible options | May have fewer alternatives for unusual files |
| Pricing flexibility | Can compare rate, points, reserve rules, and documentation requirements | Terms are limited to available in-house structures |
| Credit review | Soft-pull prequalification may protect credit while options are reviewed | Process may vary by provider |
A soft credit pull mortgage review can be a practical first step for buyers concerned about timing. Glen Allen Mortgage offers NoTouch Credit Pull options for a soft pull mortgage broker conversation, a no hard inquiry mortgage pre approval discussion, or a mortgage pre approval without hard pull review when the file qualifies for that approach. A no credit hit mortgage application review can help establish a plan before a buyer submits an offer, though a full credit report may be required later for final approval.
Colonial 1st Mortgage still appears in some Richmond and Glen Allen mortgage broker directory listings. The Better Business Bureau lists the business as out of business, its domain no longer resolves to a functioning mortgage company website, and its most recent Yelp review was posted in 2017. Buyers who encounter it in search results should verify current licensing status through NMLS Consumer Access before making contact.
Frequently Asked Questions
1. How many months of reserves do non-QM loans require?
Many programs require three to 12 months of PITI reserves. Larger balances, investment properties, lower credit scores, and alternative income documentation can increase the requirement.
2. Are reserves paid at closing?
No. Reserves are usually funds that remain in your verified accounts after closing. They are not an added broker fee.
3. Can retirement accounts count as reserves?
Often yes, but programs may discount retirement assets because the funds may not be immediately accessible without restrictions or tax impact.
4. Do bank statement loans require more reserves?
They can. The exact requirement depends on the loan amount, FICO score, occupancy, down payment, and the bank-statement program selected.
5. Do investment property DSCR loans require reserves?
Usually. DSCR programs commonly evaluate both the property’s rental income and the borrower’s post-closing reserve position.
6. Can a gift count toward reserves?
Some programs allow eligible gifted funds, while others require reserves to come from the borrower’s own verified assets. Review this before accepting a gift.
7. Does a larger down payment lower reserve requirements?
Sometimes. More equity can improve the overall risk profile, but it does not automatically eliminate reserve requirements.
8. When should I calculate reserves?
Calculate them before shopping seriously. A soft-pull prequalification can identify whether your current asset picture supports the price range you want.
Legal Disclaimer
This article is for educational purposes only and is not a commitment to provide financing, an approval, or financial, legal, or tax advice. Loan programs, rates, fees, reserve requirements, credit standards, and eligibility can change without notice. All financing is subject to application, verification, underwriting review, appraisal when required, and final program guidelines.
If your income comes from a business, rental portfolio, commissions, or bank deposits rather than a standard W-2, start by identifying your usable reserves. That one number can make your search in Glen Allen more confident and far less rushed.
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA & DC
[Contact] | NoTouch Credit Pull available — no hard inquiry, no credit hit.
