Freddie mac reserve requirements for investment property

Freddie Mac announced an increase to the maximum number of financed properties they will allow on second home and investment property transactions in Freddie Mac Bulletin 2018-10.

Table of Contents Show

What is the borrowers reserve requirement for an investment property?
What is an acceptable source of reserves?
Do reserves have to be seasoned?

Effective with loans submitted to Loan Product Advisor on or after August 20, 2018 borrowers will be eligible to have up to 10 financed properties, including the subject (currently Freddie only allows 6).

The following will be required when the number of financed properties, including the subject, is 7-10 and the transaction is a second home or investment:

A minimum credit score of 720, and
Eight (8) months of PITIA payments for each additional financed property

NOTE: One to six financed properties will continue to require two (2) months PITIA in reserves for each additional property.

The Loan Product Advisor Feedback Certificate will provide the amount of reserves required.

The HomeBridge Freddie Mac guidelines have been updated with this information and posted to the HomeBridge website at www.HomeBridgeWholesale.com

If you have any questions, please contact your Account Executive

What is the borrowers reserve requirement for an investment property?

Reserves by property type A second home or vacation home purchase may require anywhere from two to four months of reserves but, again, it can be higher. Investment properties often require the most reserves, anywhere from six months or higher pending your credit profile and lender guidelines.

What is an acceptable source of reserves?

Accepted Mortgage Reserve Sources These include borrowed funds, money from cash-out real estate settlements and real estate equity. Other acceptable sources of liquid reserves include: Checking or savings accounts. Trust accounts.

Can cash

Can proceeds from a cash-out refinance on the subject property be used as reserves? Cash proceeds from a cash-out refinance transaction on the subject property are an unacceptable source of reserves.

Do reserves have to be seasoned?

Sure and absolutely. This is why mortgage lenders typically want to see that any assets used in the mortgage transaction are seasoned for at least 60 days. Simply put, this means providing two months of bank statements that show the funds being present in the account for that entire duration.