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Fannie Mae Second Home DTI Guidelines On Conventional Loans

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Fannie Mae Second Home DTI Guidelines On Conventional Loans

This BLOG On Fannie Mae Second Home DTI Guidelines On Conventional Loans Was PUBLISHED On March 13th, 2019

Fannie Mae Second Home DTI Guidelines on Conventional Loans is capped at 50% DTI.

  • Home buyers cannot purchase non-owner occupant homes with government loans
  • Government Loans are FHA, VA, and USDA
  • Government loans are for owner occupant homes only
  • Fannie Mae and Freddie Mac allows second and investment home financing on conventional loans
  • Minimum down payment required on second home financing is 10%
  • Investment properties require 15% to 30% down payment on conventional loans
  • Multi-Unit properties require larger down payments
  • The down payment requirement is dependent on the type of property on investment home financing

On this blog, we will discuss Fannie Mae Second Home DTI Guidelines and solutions to higher DTI Borrowers.

Types Of Conventional Loan Programs

Conventional Loans are often called conforming loans.

  • This is because conventional loans need to conform to Fannie Mae and/or Freddie Mac Mortgage Guidelines
  • Fannie Mae and Freddie Mac do not insure or guarantee conventional loans
  • Conventional Loans are not insured and/or guaranteed by any government agency like FHA, VA, USDA Loans are
  • Fannie Mae and Freddie Mac purchase mortgages from lenders
  • In order for Fannie/Freddie to purchase loans by lenders, they need to conform to their lending guidelines
  • This is why lenders require borrowers to meet conforming guidelines

There are three types of conventional loans:

  • Owner-Occupant Primary Residence¬†
  • Second Homes
  • Investment Homes

Each of the above loan program has its own conforming loan guidelines.

Mortgage Rates On Second Versus Investment Homes

Mortgage rates on second homes are much lower than investment properties.

Qualifying For Second Home Financing

Fannie Mae and Freddie Mac require 10% down payment on second home financing.

  • Potential rental income cannot be used
  • Borrowers need to qualify for both their primary and future second home purchase
  • Maximum debt to income ratio allowed is 50%
  • Fannie Mae and Freddie Mac both have its own lending guidelines when it comes to non-occupant co-borrowers

Adding Non-Occupant Co-Borrowers On Second Home Mortgages

Fannie Mae and Freddie Mac are two separate government sponsored enterprises (GSE).

  • Although most guidelines are similar, there are differences
  • Fannie Mae does not allow non-occupant co-borrowers on second home mortgages
  • Freddie Mac DOES ALLOW non-occupant co-borrowers on second homes
  • Both Fannie Mae and Freddie Mac allows two or more families to purchase a second home

Both second home buyers can be on the second home loan as co-borrowers

NON-QM Loans On Second And Investment Home Financing

Gustan Cho Associates at Loan Cabin Inc. offers alternative financing loan programs on second and investment home loans. NON-QM Loans are portfolio loans we offer. Some investment home loans are asset-based financing and borrower’s credit/income is not required. We also have non-qm loans with no income tax returns required. Gustan Cho Associates at Loan Cabin Inc. has bank statement loans for self employed borrowers. For more information, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. We are available 7 days a week, evenings, weekends, and holidays.

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