diff --git a/client/tests/kvm/scripts/allocator.py b/client/tests/kvm/scripts/allocator.py
index 1036893..227745a 100755
--- a/client/tests/kvm/scripts/allocator.py
+++ b/client/tests/kvm/scripts/allocator.py
@@ -8,10 +8,12 @@ Auxiliary script used to allocate memory on guests.
 """
 
 
-import os, array, sys, struct, random, copy, inspect, tempfile, datetime
+import os, array, sys, struct, random, copy, inspect, tempfile, datetime, math
 
 PAGE_SIZE = 4096 # machine page size
 
+TMPFS_OVERHEAD = 0.0022 # overhead on 1MB of write data 
+
 
 class MemFill(object):
     """
@@ -32,7 +34,8 @@ class MemFill(object):
 
         self.tmpdp = tempfile.mkdtemp()
         ret_code = os.system("mount -o size=%dM tmpfs %s -t tmpfs" %
-                             ((mem + 25), self.tmpdp))
+                             ((mem+math.ceil(mem*TMPFS_OVERHEAD)), 
+                             self.tmpdp))
         if ret_code != 0:
             if os.getuid() != 0:
                 print ("FAIL: Unable to mount tmpfs "
@@ -42,7 +45,7 @@ class MemFill(object):
         else:
             self.f = tempfile.TemporaryFile(prefix='mem', dir=self.tmpdp)
             self.allocate_by = 'L'
-            self.npages = (mem * 1024 * 1024) / PAGE_SIZE
+            self.npages = ((mem * 1024 * 1024) / PAGE_SIZE)
             self.random_key = random_key
             self.static_value = static_value
             print "PASS: Initialization"
@@ -83,7 +86,7 @@ class MemFill(object):
         @return: return array of bytes size PAGE_SIZE.
         """
         a = array.array("B")
-        for i in range(PAGE_SIZE / a.itemsize):
+        for i in range((PAGE_SIZE / a.itemsize)):
             try:
                 a.append(value)
             except:
diff --git a/client/tests/kvm/tests/ksm_overcommit.py b/client/tests/kvm/tests/ksm_overcommit.py
index 24d6643..8dc1722 100644
--- a/client/tests/kvm/tests/ksm_overcommit.py
+++ b/client/tests/kvm/tests/ksm_overcommit.py
@@ -348,12 +348,29 @@ def run_ksm_overcommit(test, params, env):
 
     # Main test code
     logging.info("Starting phase 0: Initialization")
+
     # host_reserve: mem reserve kept for the host system to run
-    host_reserve = int(params.get("ksm_host_reserve", 512))
+    host_reserve = int(params.get("ksm_host_reserve", -1))
+    if (host_reserve == -1):
+        # default host_reserve = MemAvailable + one_minimal_guest(128MB)
+        # later we add 64MB per additional guest
+        host_reserve = ((utils.memtotal() - utils.read_from_meminfo("MemFree"))
+                        / 1024 + 128)
+        # using default reserve
+        _host_reserve = True
+    else:
+        _host_reserve = False
+
     # guest_reserve: mem reserve kept to avoid guest OS to kill processes
-    guest_reserve = int(params.get("ksm_guest_reserve", 1024))
-    logging.debug("Memory reserved for host to run: %d", host_reserve)
-    logging.debug("Memory reserved for guest to run: %d", guest_reserve)
+    guest_reserve = int(params.get("ksm_guest_reserve", -1))
+    if (guest_reserve == -1):
+        # default guest_reserve = minimal_system_mem(256MB)
+        # later we add tmpfs overhead
+        guest_reserve = 256
+        # using default reserve
+        _guest_reserve = True
+    else:
+        _guest_reserve = False
 
     max_vms = int(params.get("max_vms", 2))
     overcommit = float(params.get("ksm_overcommit_ratio", 2.0))
@@ -365,6 +382,10 @@ def run_ksm_overcommit(test, params, env):
 
     if (params['ksm_mode'] == "serial"):
         max_alloc = vmsc
+        if _host_reserve:
+            # First round of additional guest reserves
+            host_reserve += vmsc * 64
+            _host_reserve = vmsc
 
     host_mem = (int(utils.memtotal()) / 1024 - host_reserve)
 
@@ -412,6 +433,10 @@ def run_ksm_overcommit(test, params, env):
             if mem - guest_reserve - 1 > 3100:
                 vmsc = int(math.ceil((host_mem * overcommit) /
                                      (3100 + guest_reserve)))
+                if _host_reserve:
+                    host_reserve += (vmsc - _host_reserve) * 64
+                    host_mem -= (vmsc - _host_reserve) * 64
+                    _host_reserve = vmsc
                 mem = int(math.floor(host_mem * overcommit / vmsc))
 
         if os.popen("uname -i").readline().startswith("i386"):
@@ -420,8 +445,16 @@ def run_ksm_overcommit(test, params, env):
             if mem > 3100 - 64:
                 vmsc = int(math.ceil((host_mem * overcommit) /
                                      (3100 - 64.0)))
+                if _host_reserve:
+                    host_reserve += (vmsc - _host_reserve) * 64
+                    host_mem -= (vmsc - _host_reserve) * 64
+                    _host_reserve = vmsc
                 mem = int(math.floor(host_mem * overcommit / vmsc))
 
+    # 0.055 represents OS + TMPFS additional reserve per guest ram MB
+    if _guest_reserve:
+        guest_reserve += math.ceil(mem * 0.055)
+
     swap = int(utils.read_from_meminfo("SwapTotal")) / 1024
 
     logging.debug("Overcommit = %f", overcommit)
diff --git a/client/tests/kvm/tests_base.cfg.sample b/client/tests/kvm/tests_base.cfg.sample
index bb3646c..06eaa74 100644
--- a/client/tests/kvm/tests_base.cfg.sample
+++ b/client/tests/kvm/tests_base.cfg.sample
@@ -305,9 +305,9 @@ variants:
         ksm_overcommit_ratio = 3
         # Max paralel runs machine
         ksm_parallel_ratio = 4
-        # Host memory reserve
-        ksm_host_reserve = 512
-        ksm_guest_reserve = 1024
+        # Host memory reserve (default - best fit for used mem)
+        # ksm_host_reserve = 512
+        # ksm_guest_reserve = 1024
         variants:
             - ksm_serial:
                 ksm_mode = "serial"
