How much should I keep in cash reserves after closing, and why do lenders check?

Cash reserves are liquid assets left after your down payment and closing costs, measured in months of your future mortgage payment (principal, interest, taxes, insurance). Conventional loans on a primary residence may require none to two months, while jumbo loans, investment properties, and second homes often require six to twelve months. Lenders check reserves because borrowers with a cushion are far less likely to default if income drops. Retirement accounts, brokerage balances, and savings can usually count, sometimes at a discounted value for retirement funds. Beyond satisfying the lender, keeping several months of reserves protects you from job loss and surprise home repairs. Do not spend your entire savings to close; a house with no financial buffer is a fragile position.