What Are Fannie Mae Underwriting Guidelines?


Quick Answer

Fannie Mae underwriting guidelines are requirements for managing mortgage activities between lenders and home buyers. Fannie Mae provides guidelines on areas such as property types, property use, financing purpose, debt and income requirements, and purchase price percentage.

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Full Answer

The type of property being financed is a key factor in meeting Fannie Mae guidelines. Fannie Mae restricts financing to single family homes and residential property that has up to four units. The property units include townhomes, apartments, condominiums and co-ops, which should be permanently fixed to a structure.

Fannie Mae also controls the mortgage amount on property use such as primary residence, investment property and vacation home. A primary residence, for example, receives a higher mortgage amount than an investment property because an investment property is more risky than a primary residence. Fannie Mae provides borrowers the option to refinance their existing properties by refinancing the new mortgage for the same amount of the existing mortgage balance or to do a limited cash-out refinance.

Fannie Mae also provides debt and income guidelines based on the debt-to-income ratio of the borrower that vary according to the borrower’s loan value and credit score. Fannie Mae’s mortgage allows a percentage amount of the purchase price or market value of the home usually less than 100 percent.

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