Affordable LTV

Refer to the following sections of the Selling Guide for information about affordable lending product options on which Fannie Mae allows the LTV ratio determination to be based solely on the appraised value for purchase transactions:

• Shared Equity Transactions (Selling Guide section B5-5.3-03, Shared Equity Transactions: Eligibility, Underwriting and Collateral Requirements);

• Community Seconds® with a Subsidized Sales Price (Selling Guide section B5-5.1-02, Community Seconds Loan Eligibility).

Note: These options only apply to conventional loan casefiles.

You can indicate that the borrower on the loan casefile is using one of these options by following the Affordable LTV guidance outlined below. When the Affordable LTV loan feature is selected, DU determines the LTV, CLTV, and HCLTV ratios solely on the appraised value for purchase transactions, and not the lesser of the sales price or the appraised value.

1. Click section L3. Mortgage Loan Information in the navigation bar.
   
   

2. In the L3. Mortgage Loan Information screen, click the Edit icon.
   
   

3. Under Loan Features, enter Affordable LTV in the Product Description field.
   
   

4. Click Done.

Note: When the Affordable LTV indication is used on a second home or investment property, DU returns an Ineligible recommendation because the affordable lending options are only eligible on principal residence transactions. Although DU applies that occupancy guideline, you must ensure the loan meets all the requirements related to shared equity transactions, or a Community Seconds loan with a subsidized sales price, as specified in the Fannie Mae Selling Guide (including property type, amortization type, and loan purpose).