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 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.
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.