Lender reserve requirement

[Michael Bertsch]

Hello BP community! I have a question about the 6 month reserve required whenever you finance a property. Could I take cash from my HELOC, transfer it to my checking/savings account, and that be my reserve? After financing is finished, I could pay off my HELOC and repeat with next property. Is this a loophole around the the reserve?

[Charlie Fitzgerald]

You might defeat the purpose as your DTI would be higher after borrowing your reserves. You also might run into seasoning issues with the money being deposited from the HELOC advance. Additionally, generally you are not allowed to borrow down payment or reserves.