Cash Reserves for Mortgage

5 Replies

Hello everyone,

Getting my down payment, closing costs, and cash reserves lined up for my first investment property come January.

But today I read that lenders also want to see six months of cash reserves available for my primary residence. Approximately $7k in my case.

Is this information accurate? My credit score is 820.

Thanks

@Craig Risser

My guess is that mainly happens with conventional loans. I've mainly just used portfolio loans. I did experience that type of request once tbough, and it was for a commercial loan on a $400,000 8-plex while trying to use a big-name bank.

Originally posted by @Craig Risser :

Hello everyone,

Getting my down payment, closing costs, and cash reserves lined up for my first investment property come January.

But today I read that lenders also want to see six months of cash reserves available for my primary residence. Approximately $7k in my case.

Is this information accurate? My credit score is 820.

Thanks

 Six months on your primary residence might be an overlay, but it's not a Fannie requirement. 

If you have 1 to 4 financed properties (each can be a 1-4 unit property), the current general standard is:

- 0 months on primary residence, assuming you have good credit.

- 6 months if the subject property is an investment.

- 2% of unpaid mortgage balances for all other investment properties with 1 or more mortgages. 

(As always, Fannie rules are not FHA rules, they aren't jumbo rules, they aren't anything but Fannie rules applicable to Fannie loans)

It depends on what loan program you are using for the purchase of the investment property? If you are using a Fannie Mae loan, the AUS or automated underwriting system will determine how much overall cash reserves you will be required to have? That said, I generally see (depending on credit score and many other factors) no cash reserves required for the primary and 2% of the outstanding balance required of the investment property?

Talk with the loan officer that will be closing your loan, have them run the AUS to determine the final numbers required?

Originally posted by @Craig Risser :

@Chris Mason

Thanks. I understand every situation is unique but basically the six month reserves on a primary residence “requirement” is a bunch of junk considering my credit score is strong?

 It might be a genuine requirement of that lender, but it's not a requirement from Fannie Mae. The speed limit can be 55 miles per hour, but an individual driver can drive slower and more conservatively than that...