Published Saturday, 24 February 2024

Fannie Mae

Fannie Mae is a government-sponsored enterprise (GSE) that was created in 1938 to provide liquidity to the mortgage market by purchasing mortgages from lenders and packaging them into mortgage-backed securities (MBS). Fannie Mae operates in the secondary mortgage market, which means that it does not lend money directly to borrowers. Instead, it works with lenders to provide mortgage financing to home buyers.

One type of mortgage offered by Fannie Mae is the conventional mortgage. A conventional mortgage is a loan that is not insured or guaranteed by the government. Instead, it is a loan that is issued by a mortgage lender and is backed by Fannie Mae.

To be eligible for a Fannie Mae conventional mortgage, borrowers must meet certain requirements. These requirements can vary depending on the specific loan program, but generally include the following:

Credit score: Borrowers must have a good credit score to be eligible for a Fannie Mae mortgage. This typically means a score of at least 620, although some programs may have higher requirements.
Down payment: Borrowers must typically make a down payment of at least 3% of the purchase price of the home. However, certain programs may allow for a lower down payment or even no down payment.
Debt-to-income ratio: Borrowers must have a debt-to-income ratio that is within certain limits. This ratio is calculated by dividing the borrower's total monthly debt payments by their gross monthly income.
Property type: Fannie Mae mortgages are available for a variety of property types, including single-family homes, condominiums, and multi-family properties.

Fannie Mae offers a number of different mortgage programs to meet the needs of different borrowers. Some of the programs available include:

HomeReady: This program is designed for low- to moderate-income borrowers, and allows for a down payment as low as 3%. It also allows for non-traditional credit sources, such as utility bills and rent payments, to be used to help establish credit.
HomePath: This program is for homes that are owned by Fannie Mae, and offers a variety of incentives to encourage home buyers to purchase these properties.
MyCommunityMortgage: This program is designed for low- to moderate-income borrowers who are purchasing a home in a designated underserved area. It allows for a down payment as low as 3% and offers flexible underwriting guidelines.
Standard 97: This is a standard conventional mortgage program that allows for a down payment as low as 3% and offers flexible underwriting guidelines.

Fannie Mae also offers mortgage programs specifically for first-time home buyers and for those who are looking to refinance their existing mortgage. These programs can offer a variety of benefits, such as lower down payments and more flexible underwriting guidelines.

In addition to its conventional mortgage programs, Fannie Mae also offers other types of mortgage financing, including mortgage loans for manufactured homes and mortgage loans for multifamily properties.

Overall, a Fannie Mae mortgage is a type of conventional mortgage that is backed by Fannie Mae and offered through participating lenders. It is designed to provide affordable mortgage financing to home buyers, and offers a variety of programs to meet the needs of different borrowers.