Originating & Underwriting

97% Loan to Value Options

Serving first-time homebuyers and homeowners refinancing a Fannie Mae loan

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 and ARMs 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
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.  

Learn more about homeownership education.

Down Payment Assistance

This free online tool may help identify sources of down payment assistance for your borrowers. This is a third-party website that is not managed or backed by Fannie Mae. This hyperlink is provided for lender information and convenience only, and the tool is not endorsed by Fannie Mae.

Go to the Down Payment Resource

Purchase Options for 97% LTV/CLTV/HCLTV

  HomeReady 97% LTV Standard
First-time home buyer Not required Required
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 Standard risk-based LLPAs waived for LTV ratios >80% with a credit score ≥ 680 (risk-based LLPA cap of 1.50% applies for loans outside of these parameters). Note that any Minimum MI LLPA is not subject to the cap and will be required if the Minimum MI coverage is selected. Standard risk-based LLPAs (based on loan risk characteristics)

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 is owned (or securitized) by Fannie Mae.

Documentation may come from the lender’s servicing system, the current servicer (if the lender is not the servicer), Fannie Mae’s Loan Lookup tool, or another source confirmed by the lender. All other standard  limited cash-out refinance (LCOR) policies apply.