Definition
The liquid assets a borrower has remaining after the down payment and closing costs are paid. Lenders typically require 2-6 months of mortgage payments (PITI) in reserves for conventional loans, and 6-12 months for jumbo loans. Reserves demonstrate financial stability and the ability to continue making payments if income is disrupted. Acceptable reserves include checking, savings, retirement accounts, and investment portfolios.
Related Mortgage Terms
- Closing Costs
Fees and expenses paid at the finalization of a real estate transaction, typical...
- Down Payment
The upfront portion of the home's purchase price paid in cash by the buyer. Conv...
- PITI
An acronym for the four components of a total monthly mortgage payment: Principa...
- Amortization
The process of paying off a mortgage through regular monthly payments of princip...
- Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the int...
Understanding mortgage terminology helps you compare loan offers and make informed decisions. Use our mortgage calculator to see how these terms affect your monthly payment.