Which reserve funding method does Fannie Mae accept?
Reviewed on
Fannie Mae's current project-review sources do not publish a universal list of approved reserve-study funding methods. They expressly bar baseline funding from replacing the Full Review reserve-allocation test and require the budget to fund the study's highest recommended allocation when the substitution is used.
What can safely be concluded?
Baseline funding is defined in LL-2026-03 as allowing reserve cash to approach, but not fall below, zero. For applications dated on or after August 3, 2026, a lender may not use that method to waive the budget test.
A different method name does not guarantee acceptance. The lender still must determine that the study and project meet every substitution condition. The source does not authorize Ballast to publish a list of method names as automatically approved.
What should the board compare?
Identify the method exactly as the study states it, every recommended annual allocation, the current funded reserves, the study date, and the adopted budget. If the study does not state its method or recommendation clearly, that is a document-review question before it is an eligibility conclusion.
Sources
- Fannie Mae Lender Letter LL-2026-03, issued March 18, 2026 — baseline definition and restriction effective August 3, 2026.
- Fannie Mae Selling Guide B4-2.2-01, Full Review Process, version August 5, 2026 — reserve-study substitution and content requirements.
Primary sources accessed September 11, 2026.