Cash in the Bank

Fannie and Freddie aren't as interested in post-closing reserves, but with a jumbo mortgage (over Fannie and Freddie's loan limit of $417K), you'll need plenty of money left after you close. That's just how it is nowadays.

Some jumbo mortgages require as much as 18 months of the monthly payment be held in reserves after the closing. Post-closing reserves isn't money that is spent, or even drawn on in any way, it's money that is shown to the underwriter in order to prove that a borrower has enough cash after the closing to pay the payment even in the event of income loss. This reserve could be made up of IRA accounts, 401K accounts, cash value of life insurance policies, CDs, checking, savings, pretty much anything that is liquid. Equity in the property doesn't count, nor do non-liquid assets such as jewelry, cars and boats.

At a minimum, jumbo mortgages are requiring 12 months of the payment in reserves in order to qualify. In this mortgage market, cash is king.