How do I calculate the 15% reserve allocation for my condo budget?

Reviewed on October 20, 2026

Divide the adopted budget's annual reserve allocation by annual budgeted assessment income after four permitted exclusions. The result must be at least 10% for loan applications dated before January 4, 2027 and at least 15% for those dated on or after that day. Ballast's complimentary calculator does the arithmetic, reads both tests, and states the dollar gap and the cost per unit per month.

Use the calculator

Open the reserve allocation calculator. It runs in your browser on the figures you type, stores nothing, and shows the reserve share against both thresholds with the annual gap to each. The two thresholds it compares against are read from the published rule data Ballast's Standing Check uses, not typed into the calculator.

The formula

Reserve allocation, as Fannie Mae measures it, is one fraction:

annual budgeted reserve allocation ÷ (annual budgeted assessment income − permitted exclusions)

The numerator is the reserve contribution line in the adopted budget. The denominator is assessment income, meaning the regular common expense assessments owners pay, and not the operating budget, not total expenses, and not total revenue. Both figures are annual and both come from the same budget year.

The four exclusions

The Selling Guide lets an association take four kinds of income out of assessment income before the share is measured:

incidental income the association does not rely on for operations, maintenance or capital improvements;
income collected for utilities an owner would normally pay directly, such as cable or internet billed through the association;
income already allocated to reserve accounts; and
special assessment income.

Each one shrinks the denominator, which raises the reserve share without changing a dollar of reserve funding. Most budgets carry at least one, and most preparers do not ask. An association reading 12% on gross assessment income can read 14% once the exclusions are applied, as the example below shows.

A worked example

An association budgets $400,000 of assessment income and $48,000 to reserves. On gross income that is 12.0%: clear of the 10% test and $12,000 short of the 15% test. Spread across 100 units, closing the gap costs $10.00 per unit per month.

The same budget collects $40,000 of utility pass-through and $20,000 of special assessment income. Net assessment income is $340,000, the reserve share is 14.1%, and the gap to 15% falls to $3,000, or $2.50 per unit per month. Nothing about the reserve fund changed.

Which date controls

The 15% test applies to loan applications dated on or after January 4, 2027. The date is the buyer's loan application date, not the association's fiscal year and not the day the budget was adopted. A budget adopted in November 2026 for calendar 2027 will be read against 15% by every lender whose borrower applies after January 4, so the 2027 budget is the one to get right.

An association short of the threshold still passes when a current, non-baseline reserve study exists and the budget funds its highest recommended allocation. For an association whose budget would otherwise need a large dues increase, the study can be the cheaper route, and the calculator's gap figure is the number to weigh it against.

What to do

Pull the adopted budget (treasurer). Find the reserve contribution line and the assessment income line for the same year.
Identify the exclusions (treasurer or manager). Mark any utility pass-through, special assessment income, income already going to reserves, and incidental income the association does not rely on.
Run the calculator (anyone on the board). Enter the five figures and the unit count. Read the share, the two tests and the gap.
If the share clears 15%, record it (board secretary). Note the figures and the exclusions in the minutes so the next buyer's lender can be answered in a day.
If it does not, choose the route (board vote). Raise the reserve line to 15% of net assessment income, or commission a current, non-baseline reserve study and fund its highest recommended allocation. The gap figure from step 3 is the number to weigh the study's cost against.
Screen the other nine criteria (board or manager). Reserve allocation is one of ten. The complimentary Standing Check reads all ten from the same budget facts.

What the calculator cannot decide

The calculator is arithmetic on the figures you type. It is not a warrantability determination, not lender approval, and not a reading of your reserve study. Whether a study qualifies for the substitution is a lender review against the Guide's conditions. Freddie Mac applies its own measure under its own guide, and this page does not state it.

Sources

Fannie Mae Lender Letter LL-2026-03, issued March 18, 2026: reserve allocation rises to 15% for loan applications dated on or after January 4, 2027.
Fannie Mae Selling Guide B4-2.2-01, Full Review Process, version August 5, 2026: the 10% calculation, the four exclusions and the study substitution.

Thresholds on this page are those of ruleset ll-2026-03 and its scheduled step ll-2026-03-step-2027. Primary sources accessed October 20, 2026.