New 2016 Fannie Mae Guidelines
Update 2016 Fannie Mae Guidelines On Conventional Loans
There are several changes with 2016 Fannie Mae Guidelines for home buyers interested in getting conventional loans on their home purchases. Fannie Mae and Freddie Mac are the two mortgage giants that set standards and mortgage lending guidelines for conventional loans. Conventional Loan programs are different than FHA Loans Programs, VA Loan Programs, and USDA Loan Programs because it is not just limited to primary owner occupant home financing but enables second home financing as well as investment home financing . Government mortgage loan programs, which are FHA Loans, VA Loans, and USDA Loans do not allow for second home mortgage loans and investment home mortgage loans. Government Loans are only for owner occupied primary residences only so home buyers who need to purchase second homes or investment homes would need conventional loan financing. On this article we will discuss 2016 Fannie Mae Guidelines versus other mortgage loan programs and the changes that are ahead in 2016 Fannie Mae Guidelines with regards to conventional loans.
2016 Fannie Mae Guidelines With Regards To Debt To Income Ratios And Non-Occupant Co-Borrowers
2016 Fannie Mae Guidelines on debt to income ratio requirement on conventional loans is capped at 45% DTI in order to get an approve/eligible per Fannie Mae’s Automated Underwriting System. FHA debt to income ratio requirements for mortgage loan borrowers with at least a 620 FICO credit scores are capped at 56.9% DTI. FHA Loans allow for an unlimited amount of non-occupant co-borrowers to be added to the main borrower’s mortgage in order to qualify for income and meet the necessary debt to income ratios. However, Fannie Mae does not allow for non-occupant co-borrowers on conventional loans. Fortunately, Freddie Mac does allow non-occupant co-borrowers to be added on conventional loans , unfortunately, not all mortgage lenders are Freddie Mac approved. Fannie Mae is by far the most popular and common conventional mortgage loan programs and most conventional mortgage lenders are mainly Fannie Mae approved.
2016 Fannie Mae Guidelines On Down Payment For Home Purchase
Fannie Mae re-launched the 3% down payment home purchase conventional loan program for first time home buyers. Fannie Mae and Freddie Mac have different down payment on home purchases for conventional loan programs depending whether the home buyer is buying a primary owner occupied homes, second homes, or investment homes. Freddie Mac offers the 3% down payment home purchase conventional loan program for home buyers who have not owned a home for at least three years. Most conventional loans require 5% down payment on home purchases on owner occupied homes. Second homes require 10% down payment and second homes need to be at least 100 miles from the second home buyer’s primary residence in order to be classified a second home. Second homes that are closer to the borrower’s primary home can qualify for second home financing only if the second home purchase makes sense such as being a waterfront property, golf course property, or in a resort like Orlando’s Disney World area.
2016 Fannie Mae Guidelines On Investment Homes require 20% down payment. However, if the investment property home buyer needs to use 75% of the potential rental income on the investment home purchase, then they can do so if they can put 25% down payment.
All Fannie Mae and Freddie Mac conventional loan borrowers need a 620 FICO credit score to qualify for conventional loans and all conventional loans with greater than 80% loan to value will require private mortgage insurance . One of the main advantages with having private mortgage insurance with conventional loans versus FHA mortgage insurance premium is that private mortgage insurance automatically cancels when the loan to value reaches 78% loan to value on conventional loans whereas FHA mortgage insurance premium is mandatory with the life of the 30 year fixed rate FHA mortgage loan.
With conventional loans, there is Lender Paid Mortgage Insurance where there is no private mortgage insurance required for conventional mortgage loan borrowers with over 80% loan to value in lieu of a higher mortgage rate on their conventional loans.
2016 Fannie Mae Guidelines On Waiting Period After Bankruptcy And Foreclosure
2016 Fannie Mae Guidelines in qualifying for a conventional loan after a bankruptcy is a mandatory waiting period of 4 years from the discharged date of the Chapter 7 Bankruptcy. If the mortgage borrower had mortgage part of bankruptcy , the mortgage borrower can qualify for a conventional loan 4 years from the discharge date of the Chapter 7 Bankruptcy even though the foreclosure was recorded at a later date.
2016 Fannie Mae Guidelines on waiting period after a deed in lieu of foreclosure and short sale is a mandatory waiting period of 4 years from the recorded date of the deed in lieu of foreclosure and a four year waiting period after the date of the short sale to qualify for a conventional loan.
2016 Fannie Mae Guidelines in qualifying for a conventional loan after a foreclosure is a mandatory 7 year waiting period after the recorded date of the foreclosure. Both the waiting period after the deed in lieu of foreclosure and/or foreclosure is based on the recorded date of the foreclosure where the borrower’s name is out of the deed and into the deed of the mortgage lender or the date of the sheriff’s sale where the homeowner’s name has transferred out of the mortgage note into someone else’s name.