Mortgage Answers / Homebuying Decisions
The Short Answer
Reserves are funds a lender may require you to have available after closing. They are different from the money spent on the down payment and closing costs. The required amount and acceptable accounts depend on the loan and your situation.
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Money needed to close and money required to remain afterward are different. Do not count the same funds twice.
Get the estimated amount needed at closing from the lender.
Ask whether this loan requires reserves after closing and which funds can count.
Build the two needs into the same plan without treating required reserves as extra money to spend.
Not every account or balance is counted the same way. The lender decides which documented assets are acceptable.
Tell the lender which account you want to use and provide the requested statements.
Ask which part of the account can count under the program rules. A displayed balance is not automatically fully usable.
Confirm any access, documentation or other conditions before planning around it.
Spending or moving funds may affect what remains for closing and reserves. Ask before changing the plan.
Explain the purchase, transfer or payoff before using funds the lender has reviewed.
Ask how the change affects closing cash and any required reserves.
Get updated instructions and provide records the lender requests.
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Reserves are funds a lender may require you to have available after closing. They are different from the money spent on the down payment and closing costs. The required amount and acceptable accounts depend on the loan and your situation.
Spending or moving funds may affect what remains for closing and reserves. Ask before changing the plan.
Closing costs are fees and charges involved in completing your mortgage and home purchase. They are separate from your down payment. Your Loan Estimate shows the expected amounts; actual costs depend on the loan and transaction.
A lender may need to verify where a deposit came from before counting the money for a mortgage. Keep records and explain the source accurately. A bigger account balance alone does not show that all funds are acceptable.
A co-borrower's income may be counted if it meets the loan program and lender requirements. The lender also reviews that person's debts, credit and other application details. Adding another borrower does not automatically increase the amount available or guarantee approval.
No. They are funds a lender may require to remain available after closing, separate from the money spent to complete the purchase.
Not necessarily. The lender reviews which documented funds can count under the program rules.
Ask first. Spending or moving funds may affect closing cash and any required reserves.
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Fayetteville, NC
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Show Low, AZ
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Boulder, CO
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