Banks and cash reserves

[Ryan Keenan]

after how many properties do the banks start looking at how much you have for reserves?

Thanks!

[Andrew Postell]

@Ryan Keenan a conventional loan (the loans governed by Fannie/Freddie) you will need reserves starting with the 2nd property you own. Reserves are the total payment (mortgage, insurance, taxes, and PMI if applicable). And you will need at least 2 months of reserves for each property you own. At 4 properties you will need at least 6 months of reserves per property. This can be different dependant on your credit history. Meaning it could be higher if your credit is low. Reserves can be the form of cash in your checking/savings accounts or even your retirement accounts.

HOWEVER, with all rules to conventional loans the bank can actually be MORE strict than the guidelines.  So if the bank says "we require 12 months of reserves" they are allowed to do that.  So it's important to speak to your bank about this sort of requirement so you know what to expect.  Hope this helps!