Reserve Requirements

Q. Would you elaborate on the reserve requirements?

A. The reserve requirement for homebuyers is usually two months of PITI (Principal, Interest, Taxes and Insurance).  But, as guidelines have tightened, lenders are now asking for greater reserves even with owner occupied properties.  Mortgage reserves of 6 months of PITI are not uncommon.  For self-employed borrowers and stated income loans, 6 months is increasingly the norm.  Recently, a number of us have had requests from lenders for as much as 12 months of reserves for potential borrowers.  For investment property, the reserve requirement is typically six months.  Similarly, of late, some lenders have hiked this requirement to 12 months.

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