Fannie Mae Down Payments

Did You Know That Minimum Down Payments for Fannie Mae Loans Increase after 11/16/13?

Posted on November 6th, 2013 | Sean Stephens

Fannie Mae to Implement Changes to Conventional Loans

Beginning November 16th, 2013, Fannie Mae will be implementing several changes to its automated underwriting system with their Desktop Underwriter Version 9.1. This includes the elimination of the 97% option and the 3% minimum down payments that many of us have become accustomed to.

Fannie Mae Down Payment Increases

Desktop Undewriter®  (DU®) is an automated underwriting system that helps lenders make informed credit decisions, and several of the changes will make it harder for some borrowers to qualify:

• Down Payments: The minimum amount will increase from 3% to 5%. Homebuyers can still cover the entirety of the down payment with a cash gift from family. This will impact primary residences for all eligible property types including single family homes and condos

• Loan Terms: The maximum length of a Fannie Mae loan is now 30 years, as they are eliminating their 40-year loan terms. Interest-Only (IO) loans are also being discontinued.

• Tougher debt calculations for Adjustable Rate Loans

• PMI: Fannie Mae monthly mortgage insurance (PMI) can still be removed when the borrower reaches 22% equity.

Homebuyers making a purchase with 97% financing must have their case file submitted through Destop Underwriter ® before the weekend of November 16, 2013.  This does not guarantee approval, but allows for the possibility to keep this program as an option until eligibility expires.
Due to the timing restrictions involved, now is the time for homebuyers to act. Conventional loans can be complicated so let our expertise go to work for you!
Qualifying for a Conventional Home loan can be overwhelming, but when paired with a lender that specializes and understands the Conventional loan process, it is a match that can open the door to home ownership.
For more immediate scenarios- click here to apply online for a Conventional mortgage today!