Second and Investment Home Guidelines

Here is some recent information emailed to me by a local lender re. loan guidelines for second and investment homes.

Cumulative Required Reserves
1. Subject property is a second home: two months reserves
for each residential property owned, excluding the primary residence or those
owned free and clear.

2. Subject property is an investment property: Six
months reserves on subject property investment property plus two months reserves
for each other residential property owned, excluding the primary residence or
those owned free and clear.

Detailed Clarification
1. The reserves are calculated using the full PITI for
each property - P&I, taxes, insurance, HOA dues (excluding any utility
charges), mortgage insurance, ground rents, special assessments, subordinate
financing, etc.

2. DU has not yet been updated to calculate the
required reserves for the subject property, and will not be able to calculate
the number of other financed properties owned. Therefore, underwriters
must manually apply the reserve requirements to second home or investment
property transactions.

3. Example: Borrower is financing an investment
property with a proposed $900 qualifying payment, and also owns another
investment property with a $700 PITI payment, and a primary residence with a
$1,600 PITI. The required reserves are 6X $900 plus 2X $700, for a total
of $6,800 (do not include the primary residence in the reserve
calculation).

Thank you to Steve Mevorah, Icon Mortgage for this information.