Reserves are cash or liquid assets you still have after closing, counted in months of the property's payment. Plenty of DSCR lenders ask for several months on every loan. The program terms we place are built differently, and they take the reserve question off the table for most single rental purchases. This post walks through where the lines fall, with example numbers you can check against your own deal.

Example numbers in this post are labeled as examples. They are not market data and not a quote. Where a payment needs a rate, I use Freddie Mac's 30 year fixed average of 7.18% from November 5, 2026 as a reference only. It is not a DSCR rate and not a rate we are quoting.

The two lines that decide it

Two numbers decide it: the loan amount and the LTV. Both have to be under their line for the no reserve rule to apply.

All six rows are example numbers. "Can apply" means the file may need reserves and we will tell you how many months before you write an offer. It does not mean the deal is dead.

The no reserve rule is an and, not an or. Under $1 million and under 75% LTV, both at once.

Why 75% exactly still counts

Because the rule says under 75%, and 75% is not under 75%. This is the single most common way a buyer ends up needing reserves they did not plan for.

Lots of investors default to 25% down out of habit, which puts the loan at exactly 75% LTV. One more point of down payment fixes it. On the $300,000 example, that extra point is $3,000. At the 7.18% reference rate, one month of principal and interest on a $225,000 loan is about $1,524, before taxes and insurance. So if a file at exactly 75% needed even two months of payments in reserve, the extra $3,000 down would be roughly the same money, and it would be working as equity instead of sitting in an account for the underwriter.

The same logic runs on the loan amount side. A purchase at 70% LTV keeps the loan under $1 million up to a price of about $1,428,000. Push the price higher at the same down payment and the loan crosses the line.

What reserves are on a rental loan

Reserves are proof that you can keep paying if the rental sits empty for a while. They are counted in months of the full payment: principal, interest, taxes, insurance and any HOA dues.

When a DSCR file does need them, the count is set per file, and the money usually has to be in checking, savings or investment accounts. Whether retirement funds or cash out proceeds can count toward them is also confirmed per file, so ask before you move money around. For comparison, our post on how many months of reserves a mortgage needs covers how reserves work on conventional and government loans for a home you live in.

Getting under the lines on purpose

Most buyers can get under both lines on a single rental with a small change to the down payment or the loan structure.

• Put 26% down instead of 25%. It moves the LTV under 75%. On most single family rentals that is a few thousand dollars.
• Use interest only. Interest only tops out at 70% LTV on a purchase or rate and term refinance and 65% on a cash out, so any interest only DSCR loan under $1 million is already under the 75% line. Our interest only DSCR guide shows what it does to the ratio.
• Split a big purchase. On a portfolio or a large property, the loan size line matters more than the LTV. Ask whether the structure can keep each loan under $1 million.
• Size the cash out. Cash out goes up to 80% LTV with no ownership seasoning. Taking it to 74% instead of 80% leaves equity in the house and keeps the no reserve rule in play.

Run the DSCR on your deal

Cash out and reserves

A cash out refinance to the full 80% LTV puts you above the 75% line, so reserves can apply. A cash out at or below 74% does not trigger them on loans under $1 million.

That choice matters most on a BRRRR deal, where you buy, fix and rent a house, then pull your money back out. If you want every dollar back, 80% may be worth the reserve requirement. If you can leave a little equity in, a slightly smaller cash out can make the closing simpler. Our BRRRR with a DSCR loan guide covers the no seasoning side of that plan.

Gifts, sourcing and reserves

When reserves do apply, a gift can cover them. A 100% gift is allowed, and it can cover the down payment, the closing costs and the reserves.

The paperwork is lighter than most people expect, too. There is no asset sourcing, no large deposit sourcing and no asset seasoning on these DSCR loans, so a recent transfer into your account does not set off a hunt for where it came from. Our DSCR gift funds guide explains how the gift side works. If you are self employed and would rather qualify on your own income than on the rent, a bank statement loan is the other route to look at.

One deal, start to finish

Here is one rental purchase run both ways, so you can see that the reserve decision barely moves the ratio while it changes what you need in the bank.

The example: a $300,000 single family rental leasing for $2,100 a month, with $300 a month of property tax and $150 a month of insurance. Those are example numbers, not market data and not a quote. The rate is the 7.18% reference rate.

The extra $3,000 down lowers the payment by about $20 a month and lifts the ratio by a hundredth. The real win is the reserve line. Add interest only on top and the ratio jumps to 1.18, still with no reserves required. Plug your own numbers into the calculator above to see where your deal lands.

Questions to ask any lender

If you are comparing DSCR offers, ask these four questions about reserves before you compare anything else.

1. Do I need reserves at this loan amount and LTV? Get a yes or no, not a range.
2. If yes, how many months, and of which payment? Months of the full payment on this property is the usual measure.
3. What accounts count? Checking and savings almost always do. Retirement accounts and cash out proceeds vary.
4. Will you source or season the money? On the loans we place, the answer is no.

Honest caveat

No required reserves is a loan rule, not a plan for running a rental.

And remember the rule needs both conditions. A $1.2 million loan at 60% LTV is under 75% and still over the loan size line.

Where this applies

These program terms apply in each of the 35 states where we place DSCR loans, so the reserve lines are the same whether the rental is in Pennsylvania or Oklahoma.

What changes from state to state is the rest of the payment: property tax, insurance and rent. Those move the ratio, not the reserve rule. A few state guides to start with: DSCR loans in Pennsylvania, Missouri, Alabama, South Carolina, Oklahoma, Kentucky, Georgia and Arizona. If Georgia is on your list, our best Georgia cities for rental property post runs the numbers county by county. The full list of states is below the FAQ, and our loan programs page covers everything else we place.

Sources

All sources checked November 5, 2026. Data changes, so confirm before you rely on it.

1. Pillar Mortgage Group DSCR program terms. No reserves when the loan is under $1 million and the LTV is under 75%; no asset sourcing, large deposit sourcing or asset seasoning; 100% gift for down payment, closing costs and reserves; cash out up to 80% LTV, no ownership seasoning; interest only 70% LTV purchase or rate and term, 65% cash out; loans up to $5 million; 35 states
2. Freddie Mac Primary Mortgage Market Survey. 30 year fixed average 7.18% as of November 5, 2026 (reference only)
3. Payment and LTV figures. Our arithmetic on example numbers using standard amortization formulas at the 7.18% reference rate; example numbers, not market data and not a quote

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