Financing Multiple Properties and Reserve Funds

7 Replies

Does anyone have experience with this...are the Fannie Mae reserve requirements simply cash in a savings account?

@Brandon Sturgill Yes, it has to be your own money (not a gift) and residential financing requires 6 months PITI (Principle, interest, tax, insurance) for every property. Commercial financing requires 6 months PI (Principle and interest) on every property.

I recently asked my commercial lender when enough is enough.  We need $35k in reserves (P&I) if we want another loan.  He said we could probably get away with $30k moving forward as long as we can show consistent positive cash flow

@Brandon Sturgill  In my experience a brokerage account works for Proof of Funds as well.  That might change from lender to lender, but so far it's worked for me.

Originally posted by @Brie Schmidt:

@Brandon Sturgill Yes, it has to be your own money (not a gift) and residential financing requires 6 months PITI (Principle, interest, tax, insurance) for every property. Commercial financing requires 6 months PI (Principle and interest) on every property.

I recently asked my commercial lender when enough is enough.  We need $35k in reserves (P&I) if we want another loan.  He said we could probably get away with $30k moving forward as long as we can show consistent positive cash flow

 Awesome. Thanks, Brie.

Originally posted by @Eric Belgau:

@Brandon Sturgill In my experience a brokerage account works for Proof of Funds as well.  That might change from lender to lender, but so far it's worked for me.

 Thanks, Eric. I am unfamiliar with a brokerage account...can you provide some further education?

@Brandon Sturgill

Brandon, I believe by brokerage account he means money in stocks, bonds, etc. For example, I have a hard money lender I have been talking to who counts a certain percentage of IRA or 401k money as reserves. Of course, the percentage is due to the taxation and potential penalties one will incur if they tap that money.

I've been running across these problems lately too... So frustrating!! My bank told me if I take out a commercial loan I would only need 3 months reserve. Are there any banks that provide commercial loans with no reserve??

Does anyone know if a line of credit (personal or home equity) would satisfy the reserve requirement in most lenders' eyes?

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