Process · 4 min read
What are mortgage reserves, and how many months do I need?
August 15, 2026 · Written by Bill Egan, NMLS 7342
Short answer
Reserves are money still in the bank after you pay the down payment and closing costs — a cushion of house payments. Some files need none. Two-to-four-unit homes, second homes, and investment properties often need several months of the full payment. Egan Financial Group LLC does not use a brochure number. The loan type and the rest of your file set it.
01
Why this comes up
You thought every dollar in checking would go toward the house. Then someone asked how many months of payments you would still have left on the day you close. It feels like they want you to buy the house and keep a pile of cash you were planning to spend. You reached out because nobody explained why.
02
Where this goes wrong
You spend down to the exact closing figure. Automated underwriting then asks for reserves you no longer have. A condo, a two-flat, or a second home often needs more months than a regular one-unit home. The approval was based on a balance you already spent on furniture. Now you are short, and the contract is signed.
03
What we do about it
We run the file with the cash you will actually have left, not the balance on the first day you started shopping. If the program needs reserves, we say so before you write an offer. Egan Financial Group LLC funds the loan. We will not clear you to close on money that has to exist on paper and does not exist in the account.
04
How to get ready
Keep a cushion. Do not empty checking the week of closing. Retirement accounts can sometimes count toward reserves even if you are not withdrawing them — ask us what the investor will count. Bring current statements. If you are buying a two-unit or a second home, plan on a higher cushion than a simple primary residence.