Reserve Requirements on Departing Properties on Fannie Mae Loans

If you are considering retaining your existing home and buying another, please note the following reserve requirement changes for Conventional Fannie Mae DU approved loans which must be manually verified.

1.For DU 9.0 and after, the following reserves must manually be verified.
If less than 30% equity on departing property, 6 months reserves are required on both new principal residence and old principal residence.
If 30% equity or more on departing property, 2 months reserves are required on both new principal residence and old principal residence.

2.The above also applies to Freddie Mac LP Conventional loans and is not a change from previous LP guidelines.

3.For DU 8.3 approvals, reserves are per the DU

Note: If not using rental income to qualify, all of the above still applies, so if verification is not provided showing the 30% equity, 6 months reserves will be required on both properties.

Also, a section for Reserves was created in the Conventional guides and other reserve requirements were moved to it, such as required reserves for investment and second homes.