Selling Guide

Published June 02, 2021

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What are the reserve requirements for multiple financed properties?

Calculation of Reserves for Multiple Financed Properties

If the borrower owns other financed properties (determined in accordance with B2-2-03, Multiple Financed Properties for the Same Borrower) and is financing a second home or investment property additional reserves must be calculated and documented for financed properties other than the subject property and the borrower’s principal residence. The other financed properties reserves amount must be determined by applying a specific percentage to the aggregate of the outstanding unpaid principal balance (UPB) for mortgages and HELOCs on these other financed properties. The percentages are based on the number of financed properties:

  • 2% of the aggregate UPB if the borrower has one to four financed properties,
  • 4% of the aggregate UPB if the borrower has five to six financed properties, or
  • 6% of the aggregate UPB if the borrower has seven to ten financed properties (DU only).

The aggregate UPB calculation does not include the mortgages and HELOCs that are on

  • the subject property,
  • the borrower’s principal residence,
  • properties that are sold or pending sale, and
  • accounts that will be paid by closing (or omitted in DU on the online loan application).

For additional information, see B3-4.1-01, Minimum Reserve Requirements.

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