Fannie Mae Changes Mortgage Qualifications

Many do not understand exactly what Fannie Mae is or what it does. Basically, once you apply for a mortgage, the Lender will most of the time approve the loan with Fannie mae guidelines. The purpose of that is so they can later sell the loan to Fannie mae, Freddie Mac or FHA depending on the Mortgage qualifications.

If you get a DU or desktop approval, you have a much better chance of getting approved for a new home loan. DU is a Fannie mae program that looks at the application, the credit of the person applying and determines if it fits for approval.

So What Did Fannie Mae Change

This past week, Fannie announced that they will now buy loans from first time homebuyers with only 3% down. Normally, a minimum down payment was 5% or 3.5% if you did an FHA mortgage. The recent Fannie change will allow more prospective buyers to get into a home with a low down payment.

The borrower will still need to get PMI or Private mortgage insurance to cover the amount over a conventional loan with the normal 20% down payment. PMI insures the payments if the borrower defaults.

If You Now Rent, You Are A First Time Home Buyer

You may have owned a home before and think the new program does not apply to you. It might. If you have rented over the last three years no matter how many homes you have owned previously, you are considered a first time homebuyer. Many more buyers fall into this category.

The new Fannie mae program has a few requirements, but most will fit into the new program. If you are looking to buy a new home, find out if you are qualified for the new Fannie Mae 3% down program. Getting a new home mortgage can be stressing, but worth the effort. Many times, owning a home will also be much less cost than renting while also building equity for your future.