Fannie Mae Loan Guidelines

Fannie Mae is an abbreviation for the Federal National Mortgage Association. It is a publicly traded company that purchases and services mortgages from lenders. It is Fannie Mae's role to purchase mortgages in bulk amounts, keeping the mortgage market liquid to lenders, and keep the ability to continually lend money available.

Residency

Fannie Mae applicants must be U.S. residents and have a Social Security number. Resident aliens are also eligible for Fannie Mae loans.

Occupancy

Borrowers must occupy the property being purchased as a primary residence (homestead) or can use a Fannie Mae loan as a vacation loan if they occupy the property for at least a few months a year.

Credit

The current minimum credit score for a Fannie Mae loan is 680. Applicants cannot have been late on a payment for the past two years.

Income

Borrowers must be employed for at least two years and be able to show proof of income. Verifiable income can be provided in the form of paystubs, W-2 forms or income tax return statements.

Debt

A borrower's debt cannot exceed 36 percent of their gross monthly income. If debt ratios exceed this, the loan will be denied until the borrower can pay down debts.

Expert Insight

Fannie Mae was bailed out by government funds in 2007. This has resulted in underwriting guidelines being much stricter than they were in recent years and subject to change often.

References

• Fannie Mae Underwriting Guidelines

Resources

• Fannie Mae