Reserves on conventional loan

[Michael Bertsch]

I have multiple investment properties and living in a SFR. I am wanting to buy another house to owner occupy and turn my current house into a rental. What are the reserve requirements for a conventional loan with Fannie Mae? Do I only need a few months of PITI for the primary or will I need a % of the unpaid principal balance of all my properties ?

@Chris Mason 

[Chris Mason]

Originally posted by @Michael Bertsch:

I have multiple investment properties and living in a SFR. I am wanting to buy another house to owner occupy and turn my current house into a rental. What are the reserve requirements for a conventional loan with Fannie Mae? Do I only need a few months of PITI for the primary or will I need a % of the unpaid principal balance of all my properties ?

@Chris Mason 

 Hi Michael,

This is less likely to be a huge issue in Louisiana compared to California due to the loan amounts, however in addition to 6 months of PITI reserves for the subject property, you must also have...

- You have 1-4 financed properties. 2% of unpaid mortgage balances.

- You have 5-6 financed properties. 4% of unpaid mortgage balances. This typically works out to being about ballpark 6 months of PITI reserves for all rental properties, which was the old standard (and is the current Freddie Mac standard).

- You have 7-10 financed properties. 6% of unpaid mortgage balances. 

Subject prop just needs the six months, not the above in addition to that. Primary residence does not need reserves.