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Expanded 97% LTV Options

According to consumer research conducted by Fannie Mae, the primary barrier to homeownership for first-time home buyers is saving money for the down payment and closing costs. To expand access to credit and to support sustainable homeownership, Fannie Mae offers 97% loan-to-value (LTV)/combined LTV (CLTV)/home equity CLTV (HCLTV) financing to help creditworthy home buyers who would otherwise qualify for a mortgage but may not have the resources for a larger down payment, and a refinance option for Fannie Mae loans.
NOTE: HomeReady™ borrowers do not need to be first-time home buyers to access the 97% LTV option for a home purchase.
Purchase Options for 97% LTV
HomeReady™
Fannie Mae Standard
First-time home buyer
Not required
Required

Income limits

No limits in low-income census tracts; 100% of AMI in high-minority census tracts or designated disaster areas; 80% of AMI in all other census tracts
No limits
MI coverage
25% MI coverage for LTV ratios of 90.01–97%; standard MI coverage for LTV ratios of 90% or less. Minimum MI coverage may be used subject to LLPA for Minimum MI.
Standard MI coverage; or Minimum MI coverage may be used subject to LLPA for Minimum MI
Pre-purchase homeownership education and housing counseling
Required pre-purchase homeownership education online course through Framework; borrowers will have access to housing counseling for the life of the loan through Framework
Not required

 Pricing

Standard risk-based pricing waived for LTVs >80% with a credit score >=680 (risk-based LLPA cap of 1.50% applies for loans outside of these parameters). Note that any Minimum MI LLPA is not subject to the cap and will be required if the Minimum MI coverage is selected.
Standard risk-based LLPAs (based on loan risk characteristics)
Refinance Option for 97% LTV
HomeReady™
Fannie Mae Standard
Limited Cash-Out Refinance (LCOR) for an existing Fannie Mae Loan
Not eligible
(HomeReady loans are limited to a maximum 95% LTV/CLTV/HCLTV for LCOR transactions.)
The lender must document that the existing loan is owned (or securitized) by Fannie Mae. Documentation may come from the lender’s servicing system, the current servicer (if the lender is not the servicer), Fannie Mae’s Loan Lookup tool, or another source confirmed by the lender. All other standard LCOR policies apply.
Note: This table summarizes the differences between the HomeReady and Fannie Mae Standard 97% LTV Options. All HomeReady or Fannie Mae Standard requirements apply per the Selling Guide.
Definitions: AMI: area median income; LLPA: loan-level price adjustment; first-time home buyer: At least one buyer must not have owned any residential property in the past three years (full definition); homeownership education and housing counseling: See Selling Guide section B2-2-06.

 

Note: This table summarizes the differences between the HomeReady and Fannie Mae Standard 97% LTV Options. All HomeReady or Fannie Mae Standard requirements apply per the Selling Guide.
Definitions: AMI: area median income; LLPA: loan-level price adjustment; first-time home buyer: At least one buyer must not have owned any residential property in the past three years (full definition); homeownership education and housing counseling: See Selling Guide section B2-2-06.
Resources: 97% LTV Options FAQs | HomeReady FAQs

All eligibility criteria and requirements are subject to the formal terms and conditions of the Fannie Mae Selling Guide.
© 2015 Fannie Mae. Trademarks of Fannie Mae. November 6, 2015


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