Lendor policy about conventional low down payment

5 Replies

Hey Bigger Pockets,

I have a question about Conventional Loans. My Mortgage lender has told me that if I want to take a out a loan that is less than 12% I need a 6 month reserve of property taxes and mortgage? Can anyone explain how this process works? I tried to search the forums but can't type in the right keywords to find what I need. How much money do I need? Where does the money need to sit?


Thanks,

Kevin

Originally posted by @Kevin Gomes :

Hey Bigger Pockets,

I have a question about Conventional Loans. My Mortgage lender has told me that if I want to take a out a loan that is less than 12% I need a 6 month reserve of property taxes and mortgage? Can anyone explain how this process works? I tried to search the forums but can't type in the right keywords to find what I need. How much money do I need? Where does the money need to sit?


Thanks,

Kevin

 Hi Kevin,

Can you please clarify your question? 12% being an interest rate, a down payment...?

Yes, you need six months of PITI reserves for multifamily investment properties. That's money in an account that the underwriter needs to "look at, but not touch."

Hi Chris,

Sorry I meant take out a loan with a down payment less than 12%.

Are you saying that I need six months of PITI reserves no matter what the down payment is? Does this include PMI too?

@Kevin Gomes

As Chris stated above, that requirement is for investment properties and certain "cases". There are programs out there that don't require you to have 1-2 months of reserves or non at all depending on which program you use. These programs are generally for first time homebuyers who are putting down 3-5%.

@Tony Nguyen  

What if I live in the investment property. Do I still need to put away 6 months of PITI?

Originally posted by @Kevin Gomes :

@Tony Nguyen  

What if I live in the investment property. Do I still need to put away 6 months of PITI?

 That's pretty standard for Agency 30YF type stuff, yes.

HML can make up whatever they wish, so they might not have that requirement.

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