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Reserves are liquid assets you have remaining after closing. Lenders require reserves as a safety net—proof you can make mortgage payments even if income disruptions occur. Bank statement loans typically require more reserves than conventional mortgages.

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How Reserves Are Measured

Reserves are expressed in months of PITIA—your total monthly housing payment including:
  • Principal
  • Interest
  • Taxes
  • Insurance
  • Association dues (HOA)
If your PITIA is $4,000 and you have $24,000 in eligible assets after closing, you have 6 months of reserves.

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Typical Reserve Requirements

ScenarioTypical Reserves Required
Primary residence6-12 months
Second home6-12 months
Investment property6-12 months
Loan amount over $1M12-18 months
Loan amount over $2M18-24 months
Multiple financed propertiesAdditional reserves per property
Lower credit scores or higher LTV may increase reserve requirements.

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What Counts as Reserves

Fully eligible (100%):
  • Checking and savings accounts
  • Money market accounts
  • Certificates of deposit
Partially eligible (typically 60-70%):
  • Retirement accounts (401k, IRA)
  • Stocks and bonds
  • Mutual funds
Not typically eligible:
  • Business operating accounts (needed for operations)
  • Cryptocurrency (with most lenders)
  • Unvested stock options
  • Cash value life insurance (varies by lender)

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Documenting Reserves

Lenders verify reserves through:
  • Bank statements (most recent 2 months)
  • Investment account statements
  • Retirement account statements
Large recent deposits will require sourcing and explanation, just like with your income documentation.

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Reserves vs Down Payment

Reserve requirements are separate from your down payment. If you have $200,000 in savings and need $100,000 for down payment and closing costs, your reserves are what remains—$100,000. Make sure you have enough for both before applying.