Get Your Free Financial Score →Sign InYour data on this device
Free · Open access · No sign-up required
LearnFAQHome Buying

What are cash reserves and how much do lenders want me to have?

Answer

Cash reserves are the liquid assets you'd have left after covering your down payment and closing costs — proof you could keep paying the mortgage if your income hiccuped. Lenders measure them in months of your total housing payment (principal, interest, taxes, insurance, HOA). Many conventional loans for a primary residence require little or no reserves, but stronger reserves can improve your terms and help you qualify with a higher DTI. Jumbo loans often require 6–12 months, and financing an investment property or second home usually demands several months as well. Acceptable reserves include savings, money market funds, and a portion of retirement and brokerage accounts (lenders count vested retirement balances at a discount). Beyond the lender's requirement, keeping a few months of reserves protects you after closing, when surprise repairs are common. Build that cushion before you buy with wealthserene.com/tools/emergency-fund.

← All FAQsMore Articles →

Educational disclaimer: All content on WealthSerene.com is for educational purposes only and does not constitute investment advice. Projections and calculations are illustrative — actual results will vary based on market conditions, your specific situation, and many factors outside this tool’s scope. Always consult a qualified financial professional for advice specific to your situation. View full disclosures →