Cash reserves are an important but sometimes overlooked part of DSCR underwriting. A property may generate sufficient rent and still require the borrower to demonstrate post-closing liquidity. Because Landlord Lending works with multiple investment-property lenders, exact guidelines can vary by lender, program, property, borrower profile and overall deal strength.
What Are Reserves?
Reserves are liquid or eligible assets a lender may require to remain available after closing. They are intended to provide a financial cushion for debt service and property expenses.
How Reserves May Be Measured
Programs may express reserves as a number of months of the qualifying property payment or use another liquidity standard. The required amount can vary by loan size, credit, property count and transaction type.
What Assets May Count?
Cash and certain verified financial assets may be eligible depending on program rules. Not every asset is treated equally, and documentation requirements vary.
Why Portfolio Investors Should Plan Ahead
Owning multiple financed properties can increase aggregate liquidity needs. Investors should consider reserves before committing all available cash to down payments or renovations.
Closing Funds vs. Post-Closing Liquidity
Money needed for down payment, closing costs and prepaid items is different from money required to remain after closing. Build both into the capital plan.
How Landlord Lending Helps
DSCR guidelines are not identical across lenders. Landlord Lending helps real estate investors evaluate financing options based on the property, financing objective, borrower profile and overall deal rather than forcing every scenario into one lender’s credit box.
Explore the DSCR Rental Property Loan to Buy and DSCR Rental Property Loan to Refinance programs.
Related: DSCR Loan Requirements · DSCR Loan Credit Score Requirements
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Request Loan TermsFrequently Asked Questions
How many months of reserves are required for a DSCR loan?
There is no universal requirement. Programs can vary based on loan size, credit, property count and transaction type.
Are reserves the same as closing funds?
No. Closing funds are used to complete the transaction; reserves are funds or eligible assets expected to remain available after closing.
Do more rental properties affect reserve requirements?
They can. Some lenders consider the borrower’s broader financed portfolio when determining liquidity requirements.