Mortgages - 401K Loan and Reserves Question (credit score, properties, lenders)

[justusandthekids]

When applying for a conventional loan, 5% down, liquid funds for closing costs, excellent credit scores, great DTI, etc., what do lenders need to see for "reserves?" And if we use 401K balances to show reserves, how are 401K loans treated? Do we even need to show reserves if our DTI is acceptable? What about the fact that the 401K loan shows up on my pay stubs? Does that need to be calculated into DTI?

[Pfhtex]

401k loan will be included as a debt in your debt ratio. Wasn't always this way for all loan types, but it is a reduction of your income, even though you are paying yourself.

401k balance will be entered at 60% of the actual balance. Reserves help, but if you don't own investment properties, you won't need much.