Start with the monthly number, end with a price range
Keep a cushion after closing day
The short version
Reserves are the savings you still have after the down payment and closing costs are paid. Some loan programs require a minimum; even when none is required, a cushion protects you from a repair, a job gap or a higher tax bill in the first year. Decide on your reserve first, then spend only what is left.
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Why reserves come before the price
The cash you put into a home is hard to get back quickly. Keeping reserves separate before you calculate a price range stops a larger purchase from quietly emptying your safety net.
What counts as reserves
- Checking and savings balances you can reach without penalty.
- Some retirement or investment balances, depending on the lender's rules.
- Not counted: gifts that arrive after closing or money you would need to borrow.
Building reserves into the calculator
In the reverse calculator, enter only the cash you are willing to spend. Leave the reserve out entirely, so the price range never assumes you will use it.
You asked, we answered
Do lenders require reserves?
Some loan programs and property types do, and some do not. Ask the lender which rule applies to your loan and get it in writing.
Can gift money count as reserves?
It depends on the program and when the gift is documented. Ask before closing rather than after.