DSCR Loan Reserves
Reserves are funds a borrower holds after closing, often measured as a number of months of the property’s housing expense. Some DSCR programs review reserves as part of eligibility. Specific reserve expectations vary by program, property, and scenario, and are confirmed during underwriting.
Key Takeaways
- Reserves are funds held after closing.
- They are often measured in months of housing expense.
- Reserve expectations vary by program and scenario.
- Reserves are one of several factors reviewed.
What Reserves Are
Reserves generally refer to liquid funds a borrower retains after the transaction closes. Lenders may view reserves as a cushion that supports the property through vacancies or unexpected expenses. Reserves are frequently expressed as a certain number of months of the property’s monthly housing expense.
How Reserves Affect Eligibility
Reserve expectations vary by program and can be influenced by property type, leverage, and the overall scenario. Reserves are one of several factors reviewed alongside the property’s cash flow, credit, and leverage.
Frequently Asked Questions
- How many months of reserves are required?
- Reserve expectations vary by program, property, and scenario. There is no single universal requirement across all DSCR programs.
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This article is for general educational purposes only and is not financial, legal, tax, or lending advice, a commitment to lend, or an offer to enter into a rate-lock agreement. All loans are business-purpose investor loans subject to underwriting, property review, investor guidelines, and applicable law. Program availability and terms vary by state and transaction. Simple DSCR is an assumed business name of WooHoo Mortgage LLC, NMLS #2347993.