How many months of reserves are typically needed for non-owner-occupied properties?

For non-owner-occupied properties, lenders generally require borrowers to demonstrate financial stability and the ability to cover unexpected expenses or periods of vacancy. Requiring six months of reserves provides a safeguard for both the borrower and the lender, as it ensures that the borrower can manage their mortgage payments even if rental income is disrupted or other financial challenges arise.

This six-month reserve requirement reflects a common practice in the industry, designed to mitigate risk associated with investment properties, which may not generate consistent income compared to owner-occupied residences. The solid reserve can reassure lenders of the borrower's capability to sustain financial obligations associated with the property over an extended period.

Options suggesting fewer months, such as three months, may not offer sufficient security for lenders, while a requirement for twelve or nine months could be considered excessive, potentially limiting access to financing for borrowers who are otherwise qualified. Hence, six months strikes a balance between required assurance for lenders and reasonable expectations for borrowers.