Currently in the market for about 6 months for a small multi-family 3-4 units, I'm pre-approved, and inventory is low. Since covid my loan officer has informed me that FHA now requires 12 months reserves for a 3-4 unit property (12 monthly payments of the loan) for example if my monthly payment is 2000 I would need an extra 24k for reserves on top of my 3.5% down payment and closing cost. This is definitely setting me back on purchasing my investment/first property. Anyone else having this problem, I'm in Northern California. My loan officer did notify me that I can do a conventional 3% or 5% on a single family home with a mother in law unit, but those are scarce and hard to come across in my area. And conventional 15% down on a true duplex.

The number work better on a 3-4unit property in my area.

Any advice, should I keep saving until I have enough reserves?

I’m still looking for a single family with an in-law units but they are rare.

Should I buy a single family home?

Should I be more patient and wait?

It is nearly impossible to convince a seller to accept an FHA offer. When the seller receives 20 offers - many with 20% down and willing to pay more than what the property will appraise for yours goes to the bottom of the pile. FHA will cost the seller a bit more as the appraisal is more picky. I would suggest 20 different options to what your Loan Officer is saying- reserves are not going to get you to win the bid. Save every penny you can, pay everyone on time and perfect your FICO...