source:
  type: guide
  id: fnma-sel-b3-4.1-01
  authority: Fannie Mae Selling Guide B3-4.1-01 — Minimum Reserve Requirements
  description: Fannie Mae Selling Guide B3-4.1-01 — Minimum Reserve Requirements.
  coverage_tier: operative
obligations:
- id: fnma-sel-b3-4.1-01-full
  canonical_id: fnma-sel-b3-4.1-01-full
  section: Fannie Mae Selling Guide B3-4.1-01 — Minimum Reserve Requirements
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B3-4.1-01 — Minimum Reserve Requirements
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B3-4.1-01, Minimum Reserve Requirements (08/07/2024) Introduction
      This topic contains information on minimum reserve requirements, including:
      What Are Liquid Financial Reserves? Acceptable Sources of Reserves Unacceptable
      Sources of Reserves Supplementing Borrower Funds Determining Required Minimum
      Reserves Calculation of Reserves for Multiple Financed Properties Simultaneous
      Second Home or Investment Property Transactions Examples of Reserves Calculations
      Additional Resources What Are Liquid Financial Reserves? Liquid ﬁnancial reserves
      are those liquid or near liquid assets that are available to a borrower after
      the mortgage closes. Liquid ﬁnancial reserves include cash and other assets
      that are easily converted to cash by the borrower by drafting or withdrawing
      funds from an account, selling an asset, redeeming vested funds, or obtaining
      a loan secured by assets from a fund administrator or an insurance company.
      Reserves are measured by the number of months of the qualifying payment amount
      for the subject mortgage (based on PITIA) that a borrower could pay using their
      ﬁnancial assets. For monthly housing expense and qualifying payment requirements,
      see B3-6-03, Monthly Housing Expense for the Subject Property and B3-6-04, Qualifying
      Payment Requirements. The deﬁnition of reserves applies to both manually underwritten
      mortgage loans and loan caseﬁles underwritten through DU. Funds to close are
      subtracted from available assets when considering suﬃcient assets for reserves.
      Acceptable Sources of Reserves Examples of liquid ﬁnancial assets that can be
      used for reserves include readily available funds in 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;
      and Published May 6, 2026 401 the cash value of a vested life insurance policy.
      Unacceptable Sources of Reserves The following cannot be counted as part of
      the borrower’s 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; non-vested
      stock options and non-vested restricted stock; personal unsecured loans; rent-back
      credit; interested party contributions (IPCs) (see B3-4.1-02, Interested Party
      Contributions (IPCs)); any amount of a lender contribution (see B3-4.3-06, Grants
      and Lender Contributions); and cash proceeds from a cash-out reﬁnance transaction
      on the subject property. Supplementing Borrower Funds Funds received from acceptable
      sources may be used to supplement the borrower’s funds to satisfy any ﬁnancial
      reserve requirement. Note: Eligible gift funds (but not gifts of equity) may
      be used to satisfy reserve requirements. Determining Required Minimum Reserves
      Minimum required reserves vary depending on the transaction, the occupancy status
      and amortization type of the subject property, the number of units in the subject
      property, and the number of other ﬁnanced properties the borrower currently
      owns. Manually underwritten loans: The minimum required reserves are documented
      in the Eligibility Matrix. DU loan caseﬁles: DU will determine the reserve requirements
      based on the following: Two months'' reserves for a second home transaction.
      Six months'' reserves for the following: a two- to four-unit principal residence
      transaction, an investment property transaction, and Published May 6, 2026 402
      a cash-out reﬁnance transaction with a DTI ratio greater than 45%. Additional
      reserves are required when a borrower has multiple ﬁnanced properties and the
      subject loan is secured by a second home or investment property. See Calculation
      of Reserves for Multiple Financed Properties below for additional details. Reserves
      equal to the balance of 30-day accounts (reduced by the cash back received on
      a reﬁnance transaction). Additional reserves may need to be veriﬁed based on
      DU''s overall risk assessment. Note: There is no minimum reserve requirement
      for one-unit principal residence transactions. High LTV reﬁnance loans are exempt
      from the minimum reserve requirements. Calculation of Reserves for Multiple
      Financed Properties If the borrower owns other ﬁnanced properties (determined
      in accordance with B2-2-03, Multiple Financed Properties for the Same Borrower),
      additional reserves must be calculated and documented for ﬁnanced properties
      other than the subject property and the borrower’s principal residence. The
      other ﬁnanced properties reserves amount must be determined by applying a speciﬁc
      percentage to the aggregate of the outstanding unpaid principal balance (UPB)
      for mortgages and HELOCs on these other ﬁnanced properties. The percentages
      are based on the number of ﬁnanced properties: 2% of the aggregate UPB if the
      borrower has one to four ﬁnanced properties, 4% of the aggregate UPB if the
      borrower has ﬁve to six ﬁnanced properties, or 6% of the aggregate UPB if the
      borrower has seven to ten ﬁnanced properties (DU only). The aggregate UPB calculation
      does not include the mortgages and HELOCs that are on the subject property,
      the borrower’s principal residence, properties that are sold or pending sale,
      and accounts that will be paid by closing (or omitted in DU on the online loan
      application). Simultaneous Second Home or Investment Property Transactions If
      a lender is processing multiple second home or investment property applications
      simultaneously, the same assets may be used to satisfy the reserve requirements
      for both mortgage applications. Reserves are not cumulative for multiple applications.
      Example: A lender is simultaneously processing two reﬁnance applications for
      two investment properties owned by the borrower. The application for property
      A requires reserves of $5,000. The application for property B requires reserves
      of $10,000. Because the reserves are covering the same properties, the lender
      does not have to verify $15,000 in reserves, but only those required per each
      application. Examples of Reserves Calculations Published May 6, 2026 403 The
      following tables contain examples of reserves calculations for borrowers with
      multiple ﬁnanced properties. Example 1: Three Financed Properties Occupancy
      Outstanding UPB Monthly PITIA Reserves Calculations Subject: Second Home $78,750
      $776 2 Months PITIA = $1,552 Principal $0 $179 N/A $0 Investor $87,550 $787
      $230,050 x 2% = $4,601 Investor $142,500 $905 $230,050 Total = $6,153 Example
      2: Six Financed Properties Occupancy Outstanding UPB Monthly PITIA Reserves
      Calculations Subject: Investor $78,750 $776 6 Months PITIA = $4,656 Principal
      $133,000 $946 N/A $0 Investor $87,550 $787 $345,030 x 4% = $13,801 Investor
      $142,500 $905 Investor $84,950 $722 Investor $30,030 $412 $345,030 Total = $18,457
      Example 3: Eight Financed Properties (DU ONLY) Published May 6, 2026 404 Occupancy
      Outstanding UPB Monthly PITIA Reserves Calculations Subject: Investor $78,750
      $776 6 Months PITIA = $4,656 Principal $133,000 $946 N/A $0 Investor $87,550
      $787 $629,530 x 6% = $37,772 Investor $142,500 $905 Investor $84,950 $722 Investor
      $30,030 $412 Second Home $124,500 $837 Investor $160,000 $1,283 $629,530 Total
      = $42,427 Additional Resources B2-2-03, Multiple Financed Properties for the
      Same Borrower; B3-4.4-01, DU Asset Veriﬁcation; B3-6-03, Monthly Housing Expense
      for the Subject Property; and B3-6-04, Qualifying Payment Requirements. Recent
      Related Announcements The table below provides references to recently issued
      Announcements that are related to this topic. Announcements Issue Date Announcement
      SEL-2024-05 August 07, 2024 Announcement SEL-2023-03 April 05, 2023 Published
      May 6, 2026 405 Announcements Issue Date Announcement SEL-2020-06 October 07,
      2020 Announcement SEL-2019-07 August 07, 2019 B3-4.1-02, Interested Party Contributions
      (IPCs) (05/07/2025) Introduction This topic contains information on interested
      party contributions, including: Overview Interested Parties Financing Concessions
      Maximum Financing Concessions Sales Concessions IPC Exclusions Undisclosed IPCs
      Interest Rate Buydowns Payment Abatements Lender Checklist for IPCs Overview
      Interested party contributions (IPCs) are contributions made by third parties
      with a vested interest in the transaction. These funds are used to cover costs
      that are typically the buyer''s responsibility. IPCs may include ﬁnancing or
      sales concessions, as described below. Fannie Mae does not permit IPCs to be
      used to make the borrower''s down payment, meet ﬁnancial reserve requirements,
      or meet minimum borrower contribution requirements. Fannie Mae considers the
      following to be IPCs: funds paid directly by an interested party to the borrower;
      funds that ﬂow through a third-party organization, including nonproﬁt entities,
      from the interested party to the borrower; funds provided to the transaction
      on the borrower''s behalf by an interested party, including a third-party organization
      or nonproﬁt agency; and funds donated by an interested party to a third party,
      which then pays some or all of the closing costs for a speciﬁc transaction.
      Published May 6, 2026 406 Interested Parties Interested parties to a transaction
      include, but are not limited to: the property seller, the builder or developer,
      the real estate agent or broker, any aﬃliate of the above, or any party that
      can beneﬁt from the sale of the property at the highest price and inﬂuence the
      sales price or real estate transaction (For Fannie Mae''s purposes, an aﬃliation
      exists when there is direct common ownership or control by the lender over the
      interested party, by the interested party over the lender or by a third party
      over both.) Note: A lender or employer is not considered an interested party
      to a sales transaction unless it is the property seller or is aﬃliated with
      the property seller or another interested party to the transaction. Financing
      Concessions Financing concessions are ﬁnancial contributions towards the loan
      transaction from interested parties. Financing concessions are acceptable when
      they are contributed towards: Borrower closing costs, including prepaids; or
      Borrower homeowners'' association (HOA) assessments covering any period after
      the settlement date (limited to no more than 12 months). Maximum Financing Concessions
      The table below provides maximum ﬁnancing concessions, which are calculated
      using the lower of the sales price or appraised value (not the loan amount)
      of the subject transaction. Typical fees and/or closing costs paid by a seller
      in accordance with local custom, known as common and customary fees or costs,
      are not subject to Fannie Mae maximum ﬁnancing concessions. Financing concessions
      that exceed the below limits are considered sales concessions and must be deducted
      from the property''s sales price. As a result, the maximum LTV/CLTV ratios must
      be recalculated using the reduced sales price or appraised value. Additionally,
      ﬁnancing concessions must be equal to or less than the sum of the borrower''s
      closing costs. Any amount exceeding the borrower''s closing costs must be treated
      as a sales concession. See Sales Concessions below. Published May 6, 2026 407
      Occupancy Type LTV/CLTV Ratio Maximum Financing Concessions Principal residence
      or second home Greater than 90% 3% 1 75.01% – 90% 6% 75% or less 9% Investment
      property All CLTV ratios 2% See B5-4.2-03, Loans Secured by HomePath Properties
      for an exception to this limit for principal residence transactions. 1 Sales
      Concessions Sales concessions are IPCs that take the form of non-realty items
      and may be paid prior to, at or after closing of the transaction. They include,
      but are not limited to: contributions such as cash/cash-like gifts; rebates,
      such as those from real estate agents or brokers, which are not credited towards
      the transaction; furniture, automobiles, decorator allowances, moving costs,
      and other giveaways; lender incentives as described in B3-4.1-03, Lender Incentives
      from a lender who is, or is aﬃliated with, an interested party; and ﬁnancing
      concessions that exceed the maximum ﬁnancing concessions. Sales concessions
      must be deducted from the property''s sales price and the lower of the reduced
      sales price or appraised value must be used to calculate LTV/CLTV ratios for
      underwriting and eligibility purposes. IPC Exclusions The following are not
      considered to be IPCs and are not subject to the requirements described in this
      topic. A lender credit derived from premium pricing, even if the lender is an
      interested party to the transaction; Gift funds or gift of equity from a seller
      who is also an acceptable donor provided that: The donor is not a builder, or
      another interested party, and has no aﬃliation with any other interested party
      to the transaction, and All requirements pertaining to gift funds and gift of
      equity from an acceptable donor as stated in B3-4.3-04, Personal Gifts and B3-4.3-05,
      Gifts of Equity are met; A legitimate pro-rated real estate tax credit in places
      where real estate taxes are paid in arrears; and Fees for standby commitments
      (refer to Interest Rate Buydowns section below). Published May 6, 2026 408 Undisclosed
      IPCs Mortgages with undisclosed IPCs are not eligible for sale to Fannie Mae.
      Examples of these types of contributions include, but are not limited to moving
      expenses, payment of various fees on the borrower''s behalf, "silent" second
      mortgages held by the property seller, and other contributions that are given
      to the borrower outside of closing and are not disclosed on the settlement statement.
      Interest Rate Buydowns If a temporary or permanent interest rate buydown is
      being oﬀered to the borrower, and the subsidy is funded by an interested party
      or a lender aﬃliated with one, the cost of that subsidy must be included in
      the IPC calculation. The lender must ensure the subsidy cost meets Fannie Mae''s
      allowable maximum ﬁnancing concessions. This can be accomplished by conﬁrming
      the current market interest rate (that is, the rate without the payment of any
      discount points) and the discount points being charged to obtain the interest
      rate oﬀered with the buydown. Note: Standby commitment (also known as forward
      commitment) agreements between a builder and lender for blanket interest rate
      coverage that are executed prior to signing a sales contract with a borrower
      are not subject to Fannie Mae''s maximum ﬁnancing concessions because they are
      not attributable to the speciﬁc loan transaction. Loans with a reduced interest
      rate due to a standby commitment must be delivered with SFC 887. Payment Abatements
      Loans with any type of payment abatement are not eligible for sale to Fannie
      Mae, even if they are disclosed on the settlement statement. This prohibition
      applies when an interested party funds the abatement directly and/or through
      another entity, such as a nonproﬁt down payment assistance program. Note: The
      payment of HOA fees is not considered an abatement unless the payment of the
      fee extends for more than 12 months. Paying HOA fees for 12 months or less is
      considered an interested party contribution. Lender Checklist for IPCs The lender
      must ensure that all of the following requirements for an IPC are satisﬁed.
      Published May 6, 2026 409 ✓ Lender Checklist for IPCs Ensure that any and all
      IPCs have been identiﬁed and taken into consideration. Provide the appraiser
      with all appropriate ﬁnancing data and IPCs for the subject property granted
      by anyone associated with the transaction. Ensure that the property value is
      adequately supported. Ensure that the LTV and CLTV ratios, after any IPCs are
      taken into consideration, remain within Fannie Mae’s eligibility limits for
      the particular product. Ensure that the level of mortgage insurance coverage,
      if applicable, has been obtained, based on the standard LTV ratio after any
      IPC adjustments have been made. Note: When the transaction is a purchase of
      a property located in the state of New York, the determination of whether to
      place mortgage insurance must be based solely on New York state law, using the
      appraised value at the time of sale for a non-co-op property or the sales price
      for a co-op property without an adjustment reﬂecting excess IPC contributions.
      See LTV Ratio Determination in New York State in B7-1-01, Provision of Mortgage
      Insurance, for additional information. Scrutinize all loan and sales contract
      documents, including but not limited to the sales contract, the loan estimate,
      the loan application, the appraisal report, and the settlement statement. Ensure
      that all elements of the settlement statement were taken into consideration
      during the underwriting process. Ensure that fees and expenses are consistent
      between all documents. Analyze any diﬀerences and review any discrepancies.
      Recent Related Announcements The table below provides references to recently
      issued Announcements that are related to this topic. Announcements Issue Date
      Announcement SEL-2025-03 May 07, 2025 Announcement SEL-2025-02 April 02, 2025
      Published May 6, 2026 410 Announcements Issue Date Announcement SEL-2023-08
      September 06, 2023 Announcement SEL-2021-07 August 04, 2021 Announcement SEL-2019-07
      August 07, 2019'
  judgment: false
