Reviewed by Craig Hoebing, Capital Market Funds, LLC - CBK-2007014 - Commercial Mortgage Banker · Updated October 2026
A replacement reserve is cash the lender holds, or requires the borrower to set aside, for capital items that wear out: roofs, pavement, major systems. It is not the money for a new tenant's paint and carpet. That other bucket is tenant improvements and leasing reserves. Fannie Mae's Multifamily Guide section on the replacement reserve, opened October 30, 2026, says the lender must see that the borrower has sufficient reserves to cover anticipated capital replacement and major maintenance. It says the total should equal or exceed anticipated costs, adjusted for inflation, through the sooner of two years after the loan's maturity date or twelve years after origination. It says the minimum is determined by obtaining a property condition assessment on Form 4099 and completing the replacement-reserve schedule from those cost estimates, excluding items already on the completion and repair schedule. Those are Fannie Mae's instructions for loans it buys. Another capital source can ask for a different schedule. The guide is not a universal statute.
The guide also discusses when a reserve might be fully funded at closing and when an alternative of monthly deposits can be used. It mentions thresholds stated as a percentage of underwriting value. Those percentages are omitted here so they are not read as a leverage quote. Use the guide that applies to the loan in front of you, and use the assessment, not a rule of thumb from a different city. What a property condition assessment is, as a report, is property condition assessments.
Draws, and what this page will not budget
The guide describes the replacement-reserve schedule as the borrower's agreement to replace identified items, the funding terms, and the disbursement of the funds. A draw usually requires an invoice and a inspection or a completion item the loan documents name. This page does not list a draw package. The servicer of that loan does. After closing, who you call is loan servicing.
Capital Market Funds arranges financing. It does not set Fannie Mae's reserve and it does not hold the custodial account unless a named servicer is someone else. Capital Market Funds is not a Fannie Mae DUS lender. Agency loans are placed with the approved lender. The office is 7373 E Doubletree Ranch Rd #255, Scottsdale, AZ 85258. The phone is (480) 495-8072. Capital Market Funds, LLC - CBK-2007014 - Commercial Mortgage Banker and NMLS 1445066. No per-unit dollar amount is stated.
Sources
Questions
- Are replacement reserves the same cash as a tenant-improvement reserve?
- No. Fannie Mae's guide ties the replacement reserve to capital items and major maintenance identified in a property condition assessment. Tenant improvements and leasing commissions are a different reserve, on their own page.
- Does every commercial lender use Fannie Mae's twelve-year reserve horizon?
- No. The horizon in the guide is Fannie Mae's instruction for loans it buys. A bank or a life company can set a different schedule. Read the term sheet.
- Will you publish a per-unit replacement-reserve deposit?
- No. The guide points to the property condition assessment for the cost. A per-unit figure copied from somewhere else would be a fake quote.
- Who approves a draw from the replacement reserve?
- The loan documents and the servicer. This page only says the guide describes disbursement as part of the schedule. It is not an approval.