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Loan Guidelines - Conventional Fixed

These are standard underwriting guidelines for conventional, fixed-rate mortgages. They are valid only for primary residences and 2nd homes. Please see the glossary for definitions of the terms used in the guidelines. Note these guidelines are subject to change.

Maximum loan-to-value ratio

Occupancy Property Type Credit Score Loan-to-Value Combined
Loan-to-Value
Primary
Residence
1 unit 620 97% 97%
2 units 640 80% 80%
3 or 4 units 640 75% 75%
2nd Home 1 unit 620 90% 90%

Minimum down payment

Loan-to-Value Minimum Down Payment
> 80% For a one-unit, primary residence, the entire down payment may be gifted. Otherwise, the occupant borrower must provide at least 5% of the purchase price (or 3% for the My Community Mortgage program). The remainder may be gifted.
<= 80% The entire down payment may be gifted.

Gift may come from a related person or from a municipality, nonprofit religious organization, nonprofit community organization, or your employer.

Minimum credit score

Loan-to-Value Credit Score
> 95% 620
<= 95% 620

Loan amounts

Fannie Mae sets the maximum loan amount for conventionl loans each year. Click here to view the limits on the Fannie Mae Web site. Lenders generally limit minimum the loan amount to about $60,000.

Maximum debt ratios

The maximum total debt ratio typically is determined by computer-based underwriting programs based on your financial situation and the transaction characteristics.

Maximum seller contributions

Loan-to-Value Seller Contribution
> 90% 3%
> 75% to 90% 6%
<= 75% 9%

Mortgage insurance

All loans above 80% loan-to-value require mortgage insurance coverage according to the following guidelines:

Loan-to-Value > 20-year Loan Term <= 20-year Loan Term
> 95% 35% 35%
> 90% to 95% 30% 25%
> 85% to 90% 25% 12%
>80% to 85% 12% 6%

The mortgage insurance premium is based on the required coverage. For each coverage amount, the mortgage insurance companies charge a different percentage of the loan amount, and this percentage may vary by company and over time. This premium is added to your monthly mortgage payment.

The maximum total debt ratio typically is determined by computer-based underwriting programs based on your financial situation and the transaction characteristics.

Minimum cash reserves

Occupancy Property Type Loan-to-Value Reserves
Primary
Residence
1 to 4 units All Determined by computer-based underwriting program
2nd Home 1 unit All 2 to 6 months PITI for the subject property plus 2 to 6 months reserves for each additional financed 2nd home or investment property

These are standard guidelines, and they may be raised or lowered by computer-based underwriting programs based on your financial situation and the transaction characteristics.

The monetary value assigned to any asset used for reserves is the amount of cash you would receive if you liquidated the asset. For retirement accounts, 60% of your vested interest in the account may be used to meet reserve requirements.

Other guidelines

Acceptable property types

  • 1 to 4 unit properties
  • Fannie Mae/Freddie Mac eligible condos
  • Planned-unit-developments
  • Modular homes

Note that the list does not include manufactured homes.

Maximum number of loans

While Fannie Mae guidelines allow you to finance up to ten residential properties, most lenders limit the number to four. The number of properties generally is not considered if you are financing (purchase or refinance) your primary residence.