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Conventional loans · Fannie Mae B3-4.1-01Mortgage reserves: how many months a buyer needs and what counts

Reserves are the liquid assets a borrower still has after the loan closes, measured in months of the new mortgage payment – principal, interest, taxes, insurance and association dues (PITIA). Money needed to close is subtracted first. For loans underwritten through Fannie Mae's Desktop Underwriter, there is no minimum for a one-unit principal residence; a second home needs two months; a two- to four-unit principal residence, an investment property and a cash-out refinance with a DTI above 45% need six months. A borrower who owns other financed properties needs extra reserves on second-home and investment purchases: 2% of the other mortgages' unpaid balances with one to four financed properties, 4% with five or six, 6% with seven to ten. DU can ask for more based on overall risk, and manually underwritten loans follow the Eligibility Matrix. Checking, savings, stocks, bonds, CDs, the vested part of a retirement account and the cash value of vested life insurance count; non-vested funds, unsecured personal loans, rent-back credit, seller or other interested-party contributions and lender contributions do not. Eligible gift funds can count – a gift of equity cannot.

Minimum reserves through DU

  1. One-unit primary home

    No minimum reserve requirement.

  2. Second home

    2 months of PITIA.

  3. 2–4 unit primary, investment, cash-out with DTI > 45%

    6 months of PITIA.

  4. Other financed properties

    On a second home or investment loan, plus 2% (1–4 properties), 4% (5–6) or 6% (7–10) of those mortgages' unpaid balances.

  5. 30-day accounts

    Reserves equal to their balance.

Counts toward reserves

  • Checking and savings balances left after closing.
  • Stocks, bonds, mutual funds, CDs, money market and trust accounts.
  • The vested amount in a retirement account.
  • Cash value of a vested life insurance policy.
  • Eligible gift funds.

Does not count

  • Non-vested funds, stock options and restricted stock; stock in an unlisted company.
  • Personal unsecured loans.
  • Rent-back credit and contributions from the seller, agent or builder.
  • Lender contributions and a gift of equity.
  • Cash-out proceeds from refinancing the property being financed.

Questions buyers ask

How many months of reserves do I need for a conventional loan?

Through Fannie Mae's DU: none for a one-unit primary home, two months for a second home, six months for a 2–4 unit primary home or an investment property – plus extra if you own other financed properties (Selling Guide B3-4.1-01).

Can I use my 401(k) for mortgage reserves?

The vested amount in a retirement account counts toward reserves; funds you can only withdraw at retirement, job termination or death do not.

Can gift money count as reserves?

Yes, eligible gift funds can be used for reserves; a gift of equity cannot.

Related guides

When the lender asks for another bank or retirement statement, request it from the buyer in ClosingCode with an upload link in English or Spanish – and see when it arrives.

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Source: Fannie Mae Selling Guide B3-4.1-01, Minimum Reserve Requirements (08/07/2024), selling-guide.fanniemae.com, read October 25, 2026.

General information about Fannie Mae conventional loans, not financial advice. FHA, VA, USDA and each lender's own overlays can differ. ClosingCode is software; it is not a lender. This guide is not a substitute for the advice or services of an attorney.