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Useul Tips
Fannie Mae Acceptable Sources of
Cash Reserves when Purchasing or
Refinancing a Primary Residence

When purchasing or refinancing a primary residence, lenders want to make sure that borrowers have some money left over after the closing has occurred. The cash reserves are usually two months based on your total mortgage payment, including taxes, insurance, PMI and association fees. Here is a list of the “acceptable” and “unacceptable” cash reserve sources.

Acceptable Cash Reserve Resources

  • Anticipated savings – If planning to save money before closing, the estimate for a borrower’s anticipated savings must be realistically developed. To calculate potential saved funds, the lender should reduce the borrower’s expected after-tax income for the expected savings period by existing housing expenses, monthly debt expenses based on data from the credit report, and expected living expenses, such as food, transportation, etc.
  • Checking or savings accounts
  • Investments in stocks, bonds, mutual funds, certificates of deposit, money market funds, and trust accounts
  • The amount vested in a retirement savings account
  • The cash value of a vested life insurance policy
  • Receipt of tax return refunds
  • Verified gift funds

NOTE: Certain assets may be “discounted” such as stock and bonds due to market conditions.

Unacceptable Sources of Reserves

  • Funds that have not been vested
  • Funds that cannot be withdrawn under circumstances other than the account owner’s retirement, employment termination, or death
  • Stock held in an unlisted corporation
  • Stock options and non-vested restricted stock
  • Personal unsecured loans
  • Interested party contributions (IPCs)
  • Cash proceeds from a cash-out refinance transaction
  • Cash on hand or stashed away at home.

NOTE: If you are refinancing and you qualify for a HARP loan, you may not need a cash reserve.

Please call me if you have any questions or concerns regarding "cash reserves."


Kenton Becker,
Sr. Loan Officer
Phone: 206-686-8822
Cell: 206-423-2552
Fax: 206-309-4736
MLO/NMLS #123961
Email Me

This information does not represent an offer or commitment to enter into a loan agreement. Equal Housing Opportunity Lender. Rates, Program, Fees, and Guidelines are subject to change without notice. Not a commitment to lend. The accuracy of all information, regardless of source, is not guaranteed and should be personally verified through personal inspection by and/or with the appropriate professionals. Source: MortgageCurrentcy.com. Land Home only conducts business in states we are approved to. Land Home Financial Services 22525 SE 64th Place, Suite 220, Issaquah, WA 98027. Washington Consumer Loan Branch Office License #CL-89331. NMLS ID # 89331. Date: 2-19-13
301 116th Ave SE Suite 200, Bellevue, Washington, 98004
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