What is the highest recommended reserve allocation in our study?
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When a lender uses a reserve study instead of Fannie Mae's Full Review reserve-allocation calculation, the budget must include the study's highest recommended reserve allocation. This requirement applies to loan applications dated on or after August 3, 2026.
Where should a board look?
Look for every annual contribution or reserve-allocation recommendation in the study, including alternatives, phases, or scenarios. Then compare the highest recommendation with the adopted budget's reserve line. Do not substitute a lower preferred scenario merely because it is the board's plan.
The rule matters only when the lender is using the reserve-study substitution. It does not turn every recommendation in every study into a general legal funding mandate.
What else must be true?
The lender must also retain the study and its analysis, determine that funded reserves provide protection equivalent to Fannie Mae's standard, confirm funded reserves meet or exceed the study's recommendations, reject baseline funding for the substitution, and confirm the study meets the replacement-reserve-study requirements.
Sources
- Fannie Mae Lender Letter LL-2026-03, issued March 18, 2026 — highest recommended allocation requirement effective August 3, 2026.
- Fannie Mae Selling Guide B4-2.2-01, Full Review Process, version August 5, 2026 — current substitution conditions.
Primary sources accessed September 11, 2026.