What reserves are REALLY required when buying my second property?

[Cathy T.]

Brief background...I have a duplex where I lived in one part for four years, and rented out the other part. One year ago I moved out, and have rented out both sides. All is going well there, and I have been actively looking for my next property to house hack. I originally wanted a triplex or four-plex, but my first mortgage broker informed me that such a property requires 3 to 6 months of reserves in the bank before being able to get financing for a property with more than two units. He specified that these reserves were based on the PITI of the new property, not my first property. Having limited funds, I scaled back my search to a duplex.

Long story short, I eventually sought out a new broker. (Not related to the above mentioned issue.) My search continues, but now my new broker is telling me that in order to get an FHA loan for my second property (regardless of it being a duplex, tri, or four-plex) I must have 6 months of reserves for my FIRST property in the bank, plus all the usual funds required for the new purchase. My original mortgage broker never mentioned this requirement. I can see that it is a wise idea to have reserves, but is it required? Am I misunderstanding something?

[Nicholas Covington]

@John Teachout Reserve requirements not lender specific but additional requirements can be. Reserves are required for any type of conforming loan when having other properties. The numbers vary based on the number you have and the program you are going with.

@Cathy T. FHA requires 3 months of reserves for a 3-4 units property and this is based on your primary residence aka the one you are purchasing. There are no FHA related guidelines of needing more than 3 months UNLESS you are not a well-qualified borrower to pass their "automated underwriting" system. If the lender is stating that you need more they are either miss-informed OR their lender has additional "overlays (rules)" that require that. 1-2 units do not require reserves UNLESS you again do not pass their automated underwriting.