What are reserves and how much do I need?
Answered by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
Reserves are the savings you have left after closing, counted in months of full mortgage payments. Many primary-home loans require none; jumbo and investment loans often want two to twelve months.
Retirement accounts usually count at a discount toward reserves. We'll tell you the exact reserve requirement for your program and which assets qualify.
Reserves explained
Reserves are the funds you keep after covering your down payment and closing costs. Lenders count them in months of mortgage payments. They act as a cushion if your income ever dips.
For a primary home, many loans ask for little or no reserves. Investment properties and jumbo loans usually require two to six months on hand.
What counts as reserves
Money in checking, savings, money market, and even retirement accounts can count. Retirement funds usually count at a discount because early withdrawal carries a penalty.
Not sure whether your savings clear the bar? We will check. Contact us and we will confirm your reserve requirement before you write an offer.