If you are in the market to purchase or refinance a home, you have probably heard of Fannie Mae, also known as the Federal National Mortgage Association (FNMA). Fannie Mae is a leading provider of mortgage financing in the United States, providing access to affordable financing opportunities.
Fannie Mae is just one of many mortgage options that may be available to you. Whether you are a homeowner, homebuyer, or renter, knowing the many options available can help you better understand the mortgage process.
What is Fannie Mae?
Fannie Mae is a government-sponsored enterprise (GSE) created by Congress to assist low- to median-income borrowers with homeownership. Fannie Mae was established to expand the secondary mortgage market by making mortgages available to low and middle-income borrowers.
Fannie Mae is crucial to the nation’s housing finance system as they provide liquidity, stability, and affordability to the mortgage market. In addition, liquidity offers banks, credit unions, and mortgage companies the opportunity to make loans to finance the housing market.
How Do Fannie Mae Loans Work?
Fannie Mae purchases mortgages from mortgage lenders and holds the mortgages in their portfolios or packages the loans into mortgage-backed securities (MBS) that can be sold. This process benefits mortgage lenders as it increases their liquidity to engage in further lending.
The increase of liquidity in the secondary mortgage market helps lower the interest rates for homeowners and other mortgage borrowers.
Fannie Mae Loan Requirements
Just like any other mortgage loan, Fannie Mae has several qualifications requirements:
- Credit Score. You will need a credit score of at least 620.
- Debt-to-income ratio. Your debt-to-income ratio should be no higher than 50%.
- Down Payment. A down payment as low as 3% will be required.
- Cash Reserves. Mortgage lenders want to see at least 6 months of mortgage payments in case of financial hardships or a loss of income.
Fannie Mae Programs
Fannie Mae has programs to help everyone in the housing market, from homeowners to homebuyers and even renters.
HomeReady Mortgage Program
The HomeReady mortgage is available for first-time and repeat homebuyers. The HomeReady program allows buyers to purchase a home or refinance with as little as 3% down.
Since the HomeReady mortgage program is intended to help those with low-to-moderate incomes, borrowers on the loan cannot make more than 80% of the area median income.
RefiNow Mortgage Program
A RefiNow mortgage program is a refinancing option aimed to make it easier and less expensive for qualifying homeowners to reduce their monthly housing costs and take advantage of the low-interest rates.
To qualify for the RefiNow mortgage program, homeowners must have:
- A current income at or below 100% of the area median income.
- No missed payments on the current mortgage loan in the past 6 months, and no more than one missed payment in the past 12 months.
- A mortgage with a loan-to-value ratio up to 97%, a debt-to-income ratio of 65% or less, and a minimum credit score of 620.
Mortgage Help Network
Fannie Mae’s goal is to stabilize and ensure stability in the homeownership community whenever possible.
The Mortgage Help Network was designed to help homeowners with Fannie Mae-owned loans struggling with their monthly mortgage payments. This program offers free mortgage assistance to homeowners to review their situation and determine available options.
HomePath is a website where Fannie Mae features foreclosures that they have taken possession of to resell, also known as real estate-owned properties (REO).
HomePath allows owner-occupants and community-minded organizations to make offers and purchase Fannie Mae-owned properties before they are available to investors.
Marimark Mortgage is based in Tampa, Florida, and serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in mortgages for first-time homebuyers, conventional home mortgages, refinance loans, reverse mortgages, and FHA, VA, and USDA mortgage options. In addition, we’ve worked extensively with cash-out refinancing and help clients to lower their monthly mortgage payments.
To get started with a mortgage to buy your next home, please fill out our Quick Mortgage Application or contact us.