Some conventional loan programs require that the borrower prove that they
have payment reserves over and above the cash required for closing. This may be
required on a lower down payment loan so that the borrower has a cushion to fall
back upon if hard times hit. To meet the reserve requirement, the borrower must
produce evidence that the funds exist, but they do not need to be cashed in. For
instance, if reserves are in the form of an IRA or savings bonds, evidence of
the existing balances is sufficient to prove reserves.
