The Quick Read: A jumbo lender measures reserves in months of your full housing payment, then counts only the assets it can verify and convert to cash. A big salary does not replace reserves. Unvested stock compensation usually does not count. Cash you pull out of the house generally does not count either, so the reserves have to come from somewhere else. Final counts follow each lender’s guidelines and a full file review, and nothing here is a commitment to lend.
What Reserves Are, and Why a High Salary Doesn’t Skip Them
Reserves are the liquid money you still hold after the loan closes. They are not your down payment or your closing funds. They are the cushion that shows the lender you can keep paying if income stalls.
The lender measures that cushion in months. It takes your full monthly housing payment: principal, interest, taxes, insurance, and any association dues. That bundle is called PITIA. Then it asks how many months of PITIA your countable assets would cover.
Here is the formula in plain words: countable assets after closing, divided by the monthly PITIA, equals months of reserves.
Why does a W-2 earner with a strong paycheck still face this? Because on a jumbo loan, income and liquidity are separate tests. A jumbo is any loan that starts one dollar above your county’s conforming limit. The agencies that buy conforming loans don’t buy it, so each wholesale lender writes its own reserve rules. Across the wholesale jumbo programs Lendmire places files with, reserves are measured in months of the full payment and rise as the loan amount rises.
Lendmire’s jumbo cash-out refinance program works inside that same structure. Lendmire is a mortgage broker, not the lender. It arranges these loans through wholesale lenders in the 16 states where it is licensed for consumer lending.
Key Takeaways
- Reserves are post-closing liquidity, counted in months of full PITIA.
- Requirements rise with the loan amount, and cash-out files sit at lower leverage than purchases.
- Vested, verifiable assets count. Unvested stock compensation generally does not.
- Cash-out proceeds are not a safe source of reserves.
- Every lender sets its own valuation of each asset type, so the final count follows full file review.
Where Reserves Sit in the Bigger Jumbo Picture
Reserves are one of several dials the lender turns together. The wholesale lanes we use run on a 660 decision score on the headline lane, leverage up to 90% on the strongest purchase-style structures, and loan amounts up to $5,000,000 on the largest lanes. Several lanes reach 89.99% combined loan-to-value (CLTV, the total of all loans against the home’s value), and the rest stop at 80%. On the fixed lanes the ratio ceiling is 50% of income, with 45% on the adjustable lanes and 43% on the interest-only lanes. Those are program figures, subject to lender guidelines and full file review.
Cash-out files sit at lower leverage than purchases. Two of the largest lanes also put a cash cap on the proceeds. The loan amount, the leverage tier, and the reserve months move together. A bigger loan or higher leverage usually means more months.
Which of Your Assets Count?
Liquid, owned, and documented assets count. Assets that are locked up, borrowed, or not yet yours generally do not. The Fannie Mae Selling Guide is the industry’s template for the definition: liquid or near-liquid assets available after closing. Jumbo lenders borrow that idea and then set their own overlays.
Here is how a W-2 owner’s typical asset stack is read:
| Asset | Counts? | How it’s valued | Proof |
|---|---|---|---|
| Checking and savings | Yes | Full balance, usually | Statements |
| Brokerage (vested, public) | Yes | Often discounted | Statements |
| 401(k) and IRA | Yes, if vested | Often discounted | Statements, vesting proof |
| Unvested RSUs and options | Generally no | Not counted | Not applicable |
| Gift funds | Lender-specific | Varies | Gift letter, transfer |
| Cash-out proceeds | Not safe to assume | Plan for zero | Not applicable |
“Often discounted” is the key phrase. Lenders apply a haircut: they count less than the full balance, because selling an investment or tapping a retirement account can mean market swings, taxes, or penalties. How big the haircut is depends on the lender and the asset, and no single percentage applies across the board. Ask for the lane’s valuation before you plan around a number. The figures are not interchangeable between programs.
Cash itself is easy. Stocks, bonds, and mutual funds are usually next. Retirement money takes the most care.
Retirement Accounts and Stock Pay
Retirement accounts count when you own the money outright and can withdraw it. Only the vested portion qualifies. If you have borrowed against the account, the lender subtracts that loan. Most lenders then count the balance at less than face value.
Stock compensation is where high earners get surprised. Picture a salaried engineer whose pay is strong but whose wealth sits mostly in unvested restricted stock. On paper that looks like a lot of assets. For reserves, it can look like very little. The Fannie Mae guide lists non-vested stock options and restricted stock as unacceptable sources, and wholesale jumbo lenders generally follow that logic. Once shares vest and sit in a brokerage account in your name, they’re treated like other brokerage assets.
That guide page is an older version, so use it for the concept rather than current tiers.
Can the Cash-Out Itself Count as Reserves?
Plan on no. The cash you pull from the equity is the thing being tested, so it can’t also be the cushion behind it. Fannie Mae’s guide lists cash proceeds from a cash-out refinance on the subject property as an unacceptable source of reserves. A jumbo lender can set its own rule, and that is why a particular lane’s guidelines decide the answer. But a borrower who builds a plan that depends on proceeds counting is gambling.
Here’s the lender’s logic in plain language. Reserves exist to show you can keep paying after closing. If the cushion is made of borrowed equity, the new loan is paying for its own safety net. So the lender wants other money.
This is also the point where mortgage choice matters. A home equity line of credit (HELOC) is treated differently from a cash-out first mortgage. Federal ability-to-repay rules, for example, carve HELOCs out of their core provisions. Don’t assume the same reserve logic applies to both.
How Underwriting Tests Reserves, Step by Step
The order of operations matters, because reserves are measured on what remains after everything else is settled. Here is the typical sequence on a jumbo cash-out:
1. The loan amount and leverage tier are set. The appraisal fixes the value, which fixes LTV. Above a lane’s threshold amount, two appraisals are required.
2. The existing mortgage is paid off. The new loan retires the old one first.
3. Closing costs come out. Costs and any required payoffs are settled from the new loan or from your own funds.
4. Proceeds are identified. Whatever remains is the cash-out you receive.
5. Your other assets are tallied. Each is valued under the lane’s rules, using statements.
6. PITIA is calculated on the new loan. A bigger loan means a bigger payment, which means more dollars of reserves for the same month count.
7. Counted assets are compared with required months. A surplus clears. A shortfall has to be fixed.
Income is checked separately. For a W-2 borrower that means pay stubs, W-2 forms, and employer verification. Bonus, commission, and stock-based pay generally need a history before they count. The ratio ceilings above (50%, 45%, or 43% depending on the lane) apply to that income test.
A Worked File
This is a modeled borrower, not a market statistic. Say the lane asks for a set number of months of PITIA, which we’ll call R.
The borrower has these assets:
- A checking and savings balance, counted at full value.
- A vested brokerage account, counted at a discounted share.
- A 401(k), counted at a larger discount with vesting proof.
- A large block of unvested RSUs, counted at zero.
- A cash-out of about a third of their equity, counted at zero.
When the lender totals the counted assets, it converts the sum into months of the new PITIA. Say the total comes to a bit more than R. The file clears with a small cushion. Now suppose the borrower had leaned on the RSUs and the cash-out. The same file would show a gap, even though the paper wealth looks larger.
The takeaway is simple. The lender counts only what it can verify, convert to cash, and trust. It does not count what you hope to have.
Documents and Common File-Stallers
Have these ready before you apply:
- Account statements covering the period the lane asks for, with every page included
- Vesting statements for retirement accounts and any stock plans
- A written explanation and a paper trail for any large, unusual deposit
- Pay stubs, W-2 forms, and employer verification
- A gift letter and transfer proof, if gift funds are allowed on the lane
The usual stallers are easy to avoid. Moving money between accounts right before applying creates deposits the lender has to source. Business accounts and jointly owned balances may not count for you. And statements with missing pages come back as conditions.
What If You’re Short?
A shortfall is a puzzle, not a dead end. Four moves tend to help:
1. Take less cash. A smaller loan means a smaller PITIA, so fewer dollars of reserves are needed.
2. Season or reorganize assets. Moving funds early, with a clear paper trail, lets them count when the lender reviews statements.
3. Wait for vesting. Stock that vests and sits in your brokerage account becomes countable.
4. Compare lanes. Valuations and month counts differ by lane, and a different structure can change the answer.
Keeping the new loan at or below the county limit would shift the file into conforming territory, where agency rules apply instead. Whether that is worthwhile depends on how much cash you need.
Key Terms Defined
Reserves: liquid assets you still hold after closing, counted in months of PITIA.
PITIA: principal, interest, taxes, insurance, and association dues, the full monthly housing payment.
Haircut: the discount a lender applies to an asset, so only part of its balance counts.
Vested: owned by you outright, with no condition that could take the asset away.
Proceeds: the cash you receive at closing from the equity you take out.
CLTV: combined loan-to-value, the total of all loans against the home’s value.
Common Mistakes
- Treating the cash-out as the cushion.
- Counting unvested RSUs as assets.
- Assuming a retirement balance counts at full face value.
- Moving money around right before applying.
- Assuming a big salary replaces reserves.
Frequently Asked Questions
Do 401(k) balances count toward reserves?
Usually yes, but only the vested portion, and often at a discount. The account must be yours to withdraw from, and any loan against it is subtracted. The discount varies by lender, so ask for the lane’s valuation.
Do cash-out proceeds count as reserves?
Plan on no. The agency template excludes them, and the lender’s reasoning is that borrowed equity can’t also be your safety net. A specific lane’s guidelines decide, but build your plan on other assets.
Do unvested RSUs count?
Generally not. Unvested stock options and restricted stock are listed as unacceptable in the agency template. Once the shares vest and sit in an account in your name, they are treated like other brokerage assets.
Why do reserve requirements rise with a larger loan?
A larger loan means a larger payment, and reserves are counted in months of that payment. Lenders also tend to add months as the amount grows, because the risk to the lender is bigger. The wholesale lanes we work with scale reserves with the loan amount.
Does a high income waive the reserve requirement?
No. Income and liquidity are tested separately. A strong paycheck helps with the ratio test, but the lane’s reserve months still apply, subject to full file review. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Next Step
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches. Program figures are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide B3-4.1-01, Minimum Reserve Requirements
2. Fannie Mae Selling Guide B3-4.1-01, archived version
3. Cornell LII, 12 CFR 1026.43
This article is part of Lendmire’s Jumbo Loans series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Fixed vs ARM for a High-Earning W-2 Owner: Jumbo Cash-Out Exit Plan · Jumbo Cash-Out Cash-in-Hand Limits for a High-Earning W-2 Homeowner · Jumbo Cash-Out Lender Questions for a Homeowner With RSUs
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.