Fannie Mae Down Payment Guidelines On Conventional Loans

Understanding Fannie Mae Down Payment Guidelines in 2025

Beginning the journey to owning a home can feel both exciting and tough. One important step is knowing the down payment rules, especially if you are looking at loans from Fannie Mae. This guide will explain the Fannie Mae down payment guidelines. With this guide, you can understand what you need to do to make your dream of owning a home come true.

What Is a Down Payment?

A down payment is the money you pay at the start when you want to buy a home. This amount is just part of the total cost of the house. Usually, it’s shown as a percentage of the home’s cost. Making a down payment tells the bank you’re serious about buying the home.

Fannie Mae’s Role in Home Loans

Fannie Mae is a special group that helps banks and lenders by buying mortgages from them. This means that when banks sell these loans, they get money to give more loans to people like you. Fannie Mae doesn’t lend money but has specific rules that lenders must follow.

A critical part of these rules is the Fannie Mae down payment guidelines. These guidelines tell banks how much money you need to pay upfront when buying a home. It helps make sure that borrowers can afford their loans.

Minimum Down Payment Requirements

As of 2025, here’s what you need to know about Fannie Mae down payment guidelines:

First-Time Homebuyers

If you’re buying your first home, you can put down as little as 3% of the home’s purchase price. This is part of Fannie Mae’s HomeReady® program, designed to make homeownership more accessible.

Repeat Homebuyers

If you’re considering repurchasing a home, you must know about Fannie Mae down payment guidelines. Usually, if you’ve owned a home before, you only need to put down 5% of the price for the new house.

Multi-Unit Properties

Thinking about buying a property with 2 to 4 units? You’ll need a higher down payment:

• • 2 units: At least 15% down.
  • 3-4 units: At least 25% down.

Second Homes

Expect to put down at least 10% for a vacation home or second residence.

Investment Properties

If you’re purchasing a property to rent out, the minimum down payment starts at 15% for a single-unit property. Fannie Mae requires a 75% loan to value on a one unit investment property cash-out refinance mortgage loan.

Fannie Mae has different requirements for adjustable rate mortgages on conventional loans with regards to the down payment and home equity required. We will cover Fannie Mae Guidelines with an adjustable rate mortgage on a separate article.

Loan Limits for 2025

Fannie Mae sets a limit on the amount of money it will lend for home loans, called the conforming loan limit. In 2025, this limit for a single-family home is $806,500. The limit can be as high as $1,209,750 in areas where homes cost more. It’s important to check the limit in your area because it affects what type of loan you can get.

Jumbo mortgage loans do not meet Fannie Mae and Freddie Mac mortgage lending guidelines so they are called non-conforming mortgage loans. Jumbo mortgage loans are any mortgage loans that are over the conforming Fannie Mae and/or Freddie Mac loan limits and can go as high or higher than $3 million.

Sources for Your Down Payment

Getting money for a down payment can be challenging, but the Fannie Mae down payment guidelines make it easier. Here are some ways you can find that money:

• Personal Savings: This is the money you’ve saved up over time. It could be from your job, gifts, or any other savings you have.
• Gifts: Funds from family members or close friends. Ensure you have a letter stating the money is a gift, not a loan.
• Grants and Assistance Programs: Many local and state programs offer down payment assistance. For instance, some programs provide eligible buyers with a $2,500 credit toward their down payment or closing costs. You should check the Fannie Mae down payment guidelines to know more about these options. These guidelines tell you what you need to know about getting help. Just remember that these programs often have rules, like income limits, so make sure to look into what is available where you live.
• Sweat Equity: With certain programs like HomeReady®, you can contribute to your home’s value through labor, such as renovations or improvements, which can count toward your down payment.

Private Mortgage Insurance (PMI)

If you’re buying a home and your down payment is less than 20%, you might need Private Mortgage Insurance (PMI). This insurance helps protect the bank if you can’t pay your mortgage. The cost of PMI can change, but it usually falls between 0.3% and 1.5% of your original loan amount each year.

Now, suppose you follow the Fannie Mae down payment guidelines. In that case, it’s important to know that once you have built up enough equity in your home—meaning you owe less than 80% of your home’s worth—you can ask to get rid of the PMI. This can save you money every month.

Tips to Save for a Down Payment

Saving for a down payment might seem complicated, but it can be done. Here are some easy steps to help you save up:

1. Set a Goal: Determine how much you need to save based on the type of home and its price.
2. Create a Budget: Track your earnings and spending. This will help you find areas where you can reduce your expenses.
3. Automate Savings: Set up automatic transfers to a dedicated savings account.
4. Explore Assistance Programs: Look into local, state, or employer-sponsored programs that offer down payment assistance.
5. Consider Retirement Funds: Some retirement accounts let you take money out without a penalty if you’re buying your first home. However, knowing the consequences and speaking with a financial advisor before using your retirement savings is important.

By following these tips and keeping an eye on the Fannie Mae down payment guidelines, you can make your dream of a home come true!

How Gustan Cho Associates Can Help

Understanding Fannie Mae down payment guidelines and mortgages can be tricky, but you don’t have to do it alone. Gustan Cho Associates is here to guide you through every step of the process. Here’s how we can assist:

• Personalized Advice: We’ll assess your unique financial situation and help you understand your down payment options.
• Access to Various Loan Programs: If you’re a first-time homebuyer or seeking investment opportunities, we provide various loan solutions tailored to your needs.
• Assistance with Down Payment Programs: We’ll help you identify and apply for down payment assistance programs for which you may qualify.
• Streamlined Application Process: Our team will walk you through the mortgage application, making it as smooth and stress-free as possible.

Conclusion

Understanding Fannie Mae down payment guidelines is essential for reaching your goal of owning a home. By learning what is needed and exploring all available resources, you can make smart choices and find a mortgage that suits your needs. Remember, the team at Gustan Cho Associates is here to support you every step of the way.

Call or text at 800-900-8569 or email alex@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays. Reach out to us today to start your journey toward owning a home.

Frequently Asked Questions About Fannie Mae Down Payment Guidelines:

Q: What is the Minimum Down Payment for a Fannie Mae Loan?

A: According to Fannie Mae down payment requirements, first-time homebuyers can make a down payment of just 3% of the home’s purchase price. Conversely, if you have previously owned a home, you may be required to put down a minimum of 5%.

Q: Can I Use Gift Money for My Down Payment?

A: Yes! The Fannie Mae down payment guidelines allow homebuyers to use gift funds from family or close friends. Just make sure you have a gift letter stating that the money does not need to be paid back.

Q: How Much do I Need for a Second Home Down Payment?

A: If you’re buying a vacation home, the Fannie Mae down payment guidelines require you to pay at least 10% of the home’s price.

Q: What are the Down Payment Rules for an Investment Property?

A: If you’re buying a home to rent out, the Fannie Mae down payment guidelines require at least 15% down for a single-unit investment property.

Q: Does Fannie Mae Offer Down Payment Assistance?

A: Fannie Mae doesn’t provide assistance directly, but their HomeReady® program allows for low down payments and works with local down payment assistance programs.

Q: Can I Use My 401(k) or Retirement Savings for a Down Payment?

A: Yes, the Fannie Mae down payment guidelines allow you to use retirement funds to help with your down payment. Just check if there are any penalties or tax rules before withdrawing money.

Q: Do I Need Mortgage Insurance if My Down Payment is Less than 20%?

A: Yes. If your down payment is under 20%, the Fannie Mae down payment guidelines require Private Mortgage Insurance (PMI). The good news? Once you owe less than 80% of your home’s value, you can request to remove PMI!

Q: Are there Income Limits for Fannie Mae’s 3% Down Loan?

A: Yes, for the HomeReady® program, the Fannie Mae down payment guidelines have income limits based on your location. However, if you don’t qualify for HomeReady®, other Fannie Mae loans may still be an option.

Q: Can I Use Sweat Equity to Help with My Down Payment?

A: Yes! The Fannie Mae down payment guidelines allow sweat equity, which means you can do repairs or upgrades to the home to count toward your down payment.

Q: Where Can I Get Help Understanding My Down Payment Options?

A: The experts at Gustan Cho Associates are here to help! We’ll explain the Fannie Mae down payment guidelines, check if you qualify for assistance programs, and find the best loan.

This blog about the waiting period after foreclosure requirements for borrowers on title but not on mortgage was updated on February 25th, 2025.