FHA Reserves on Multifamily Properties

[Erin A.]

Hi all,

I'm in escrow on my first real estate deal (ever), a vacant triplex in Northern California. I'm using FHA financing and everything has gone extremely well... until now.

Despite asking my mortgage broker on multiple occasions if I'd need cash for anything in addition to my down payment, inspections and appraisal, he has just informed me that I need 3 months of reserves (about $3,500) in my checking account at closing. And basically said I need to "work that out" and get back to him. He did say I can use gifted funds, which is a relief because the deal will fall through otherwise.

My main question is this: why does the FHA require reserves on 3 & 4 unit properties if they've already approved me, based on income, for PITI that I can afford on my own? The triplex is vacant so I have to be able to afford it based on my own income from the get go. (I already know about maintenance costs, etc. but the property is in excellent condition.) I don't understand!

I'm assuming there's nothing I can do about this. Correct?

Thanks everybody,

Erin