What are the minimum reserve requirements?

Determining Required Minimum Reserves

Minimum required reserves vary depending on

• the transaction,
• the occupancy status and amortization type of the subject property,
• the number of units in the subject property, and
• the number of other financed properties the borrower currently owns.

Manually underwritten loans: The minimum required reserves are documented in the Eligibility Matrix. However, when a borrower has multiple financed properties and is financing a second home or investment property, the lender must apply the applicable additional reserve requirements for the other financed second home and investment property transactions. 

DU loan casefiles: DU will determine the reserve requirements based on the overall risk assessment of the loan, the minimum reserve requirement that may be required for the transaction, and whether the borrower has multiple financed properties.

If a borrower has multiple financed properties and is financing a second home or investment property, DU will base the reserve calculations for the other financed properties on the number of financed properties determined by DU. 

Note: High LTV refinance loans are exempt from the minimum reserve requirements.

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