Can a reserve study replace Fannie Mae's reserve-allocation budget test?
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Yes, a lender may use an acceptable reserve study instead of calculating Fannie Mae's Full Review reserve-allocation percentage, but only when every substitution condition is met. Having a reserve study does not by itself waive the budget test or guarantee project eligibility.
What are the conditions?
The current Guide requires that:
- the lender obtains the acceptable study and retains it with the lender's analysis;
- the study demonstrates funded reserves that provide protection equivalent to Fannie Mae's standard;
- funded reserves meet or exceed the study's recommendations, and the budget includes its highest recommended reserve allocation;
- baseline funding is not used for the substitution; and
- the study meets Fannie Mae's replacement-reserve-study requirements.
The Guide presents the final content requirement as part of the same substitution rule. The study must also be current under the separate three-year rule.
Which percentage is being replaced?
The current Full Review calculation is 10% of annual budgeted assessment income, subject to stated exclusions. LL-2026-03 raises the minimum to 15% for Full Review applications dated on or after January 4, 2027. The substitution remains conditional after that date.
Sources
- Fannie Mae Selling Guide B4-2.2-01, Full Review Process, version August 5, 2026 — current budget test and study-substitution conditions.
- Fannie Mae Lender Letter LL-2026-03, issued March 18, 2026 — August 3, 2026 study-method changes and January 4, 2027 allocation change.
Primary sources accessed September 11, 2026.