Question: How Much Reserve is Necessary to Qualify for a Loan?

[David Avetisyan]

I have a few existing investment properties - all conventional loans. The new purchase would be a commercial loan.

Per guidelines, what is the minimum reserve needed on my existing properties, and the subject property to qualify for a loan?

Thanks in advance

[Donald Stone]

David, commercial loans work on a LTV of about 65-70% rather than reserves. Your persona credit will be a factor but the primary focus of the lender will be the cas flow of the properties. There is something called a debt to service ratio and that usually needs to be 1.0 or better (means the income covers all debt of the properties). 1.1 would mean the income covers all debt plus some surplus.

Hope this helps...