97% Loan to Value Options
Fannie Mae is expanding credit for eligible borrowers and supporting sustainable homeownership. How? By providing 97% loan-to-value (LTV) financing options that help lenders better serve first-time homebuyers.
Eligibility and Terms
- Desktop Underwriter® (DU®) underwriting required
- 1-unit principal residence, including eligible condos, co-ops, PUDs, and MH Advantage® (Standard manufactured housing: max. 95% LTV/CLTV)
- Fixed-rate mortgages with a maximum term of 30 years are eligible (restrictions apply)
- Reserves (if required per DU) may be gifted
- Combined LTV up to 105% provided subordinate lien is an eligible Community Seconds® loan
LLPA Waiver Eligibility
97% LTV loans for properties in High Needs Rural Regions may be eligible for LLPA waivers under Duty to Serve. Learn more.
Homeownership Education Requirements
To qualify for purchase loans with an LTV greater than 95%, homeownership education will be required for at least one borrower, when all occupying borrowers are first-time homebuyers. Fannie Mae HomeView® can be used to satisfy this requirement.
Learn more about homeownership education.
Down Payment Assistance
Fannie Mae permits borrowers to obtain down payment and closing cost assistance from third party sources.
Learn more about Down Payment Assistance.
Purchase Options for 97% LTV/CLTV/HCLTV
| HomeReady | 97% LTV Standard | |
|---|---|---|
| First-time home buyer | Not required | At least one borrower must be a first-time homebuyer. |
| Income limits | 80% of AMI in all census tracts. HomeReady income limits are integrated in DU or can be found using the Income Eligibility Lookup tool. | No limits |
| MI coverage | 25% MI coverage for LTV ratios of 90.01–97%; standard MI coverage for LTV ratios of 90% or less. Minimum MI coverage may be used subject to LLPA for Minimum MI. | Standard MI coverage; or Minimum MI coverage may be used subject to LLPA for Minimum MI |
| Homeownership education and housing counseling |
If all occupying borrowers are first-time homebuyers then at least one borrower must complete homebuyer education, regardless of LTV. For details see Homeownership Education and Housing counseling FAQs. |
For purchase transactions with LTV, CLTV, or HCLTV > 95%, if all occupying borrowers are first-time homebuyers, then at least one borrower must complete homeownership education, regardless of the product chosen. For details see Homeownership Education and Housing counseling FAQs |
| Pricing | LLPAs are waived for all HomeReady loans*. | Standard risk-based LLPAs* (based on loan risk characteristics) |
*Loan Level Price Adjustments (LLPAs) are waived for all HomeReady loans, as well as first-time homebuyers that meet certain income requirements and Duty to Serve loans. See the LLPA Matrix and Duty to Serve eligibility requirements for details.
Refinance Option for 97% LTV/CLTV/HCLTV
| HomeReady | 97% LTV Standard |
|---|---|
| Limited Cash-Out Refinance (LCOR) for transactions underwritten using DU when the mortgage being refinanced is owned or guaranteed by Fannie Mae |
The lender must document that the existing loan being refinanced is owned (or securitized) by Fannie Mae. Documentation may come from:
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