Separate three amounts before committing to a down payment
Cash to close is the amount you need to complete the purchase. Mortgage reserves are eligible assets available after closing. Operating cash is what the business needs for expenses such as payroll, taxes, inventory, and vendor payments. A lender may measure reserves in months of the qualifying housing payment. Your own cash cushion can be larger, especially if client payments are irregular.
How the reserve math works
Suppose you have $65,000 in eligible personal funds, need $45,000 to close, and have a $4,000 monthly qualifying housing payment. That leaves $20,000, or five months of reserves. If your specific loan requires six months, the illustration falls $4,000 short. Six months is an example. The actual reserve requirement depends on the loan and underwriting result. Ask how other financed properties or asset restrictions affect the calculation.
Can you use business cash for closing or reserves?
Potentially. When a borrower uses self-employment income to qualify and also wants to use business assets for the down payment, closing costs, or reserves, Fannie Mae requires a business cash-flow review of the impact on the business. Expect the lender to ask about ownership, access, recent balances, and what the business needs to keep operating. A balance sheet or recent statements may help document that review.
Imagine the company account has $40,000, with $15,000 in upcoming payroll and taxes and $20,000 earmarked for operating expenses. A $10,000 withdrawal would leave $30,000 against $35,000 of planned needs. Even if you can move the funds, that timing matters for both the business and the lender's income review.
Review the numbers before moving funds
Ask your lender to separate verified cash to close from required reserves. Build a short cash forecast for the business, including expected collections and bills due after closing. Compare down payment options and how each changes the payment and cash left over. Bring relevant account statements and ownership documents through a secure channel. The self-employed income guide explains the income side, and the S-corp salary and distributions guide covers shareholder access to business earnings.