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Loan Guidelines - Conventional Fixed
These are standard underwriting guidelines for conventional, fixed-rate mortgages. They are valid only for primary residences and 2nd homes. Please see the glossary for definitions of the terms used in the guidelines. Note these guidelines are subject to change.
Maximum loan-to-value ratio
| Occupancy |
Property Type |
Credit Score |
Loan-to-Value |
Combined
Loan-to-Value |
Primary
Residence |
1 unit |
680 |
97% |
97% |
| 620 |
95% |
95% |
| 2 units |
620 |
95% |
95% |
| 3 or 4 units |
620 |
75% |
75% |
| 2nd Home |
1 unit |
620 |
90% |
90% |
Minimum down payment
| Loan-to-Value |
Minimum Down Payment |
| > 80% |
The occupant borrower must provide at least 3% of the purchase price. The remainder may be gifted. |
| <= 80% |
The entire down payment may be gifted. |
Gift may come from a related person or from a municipality, nonprofit religious organization, nonprofit community organization, or your employer.
Minimum credit score
| Loan-to-Value |
Credit Score |
| > 80% |
660 |
| <= 80% |
620 |
Loan amounts
Fannie Mae sets the maximum loan amount for conventionl loans each year. Click here to view the limits on the Fannie Mae Web site. Lenders generally limit minimum the loan amount to between $20,000 and $50,000.
Maximum debt ratios
| Loan-to-Value |
Total Debt Ratio |
| > 80% |
41% to 45% |
| <= 80% |
up to 55% |
For loans with loan-to-value ratios less than or equal to 80%, the maximum total debt ratio typically is determined by computer-based underwriting programs based on your financial situation and the transaction characteristics.
Maximum seller contributions
| Loan-to-Value |
Seller Contribution |
| > 90% |
3% |
| > 75% to 90% |
6% |
| <= 75% |
9% |
Mortgage insurance
All loans above 80% loan-to-value require mortgage insurance coverage according to the following guidelines:
| Loan-to-Value |
> 20-year Loan Term |
<= 20-year Loan Term |
| > 95% |
35% |
35% |
| > 90% to 95% |
30% |
25% |
| > 85% to 90% |
25% |
12% |
| >80% to 85% |
12% |
6% |
The mortgage insurance premium is based on the required coverage. For each coverage amount, the mortgage insurance companies charge a different percentage of the loan amount, and this percentage may vary by company and over time. This premium is added to your monthly mortgage payment.
Minimum cash reserves
| Occupancy |
Property Type |
Loan-to-Value |
Reserves |
Primary
Residence |
1 unit |
> 80% |
2 months PITI |
| <= 80% |
None |
| 2 to 4 units |
All |
6 months PITI for the subject property when rental income from the other units is used for qualifying |
| 2nd Home |
All |
All |
2 months PITI for the subject property plus 2 months reserves for each additional financed 2nd home or investment property |
These are standard guidelines, and they may be raised or lowered by computer-based underwriting programs based on your financial situation and the transaction characteristics.
The monetary value assigned to any asset used for reserves is the amount of cash you would receive if you liquidated the asset. For retirement accounts, 70% of your vested interest in the account may be used to meet reserve requirements.
Other guidelines
Acceptable property types
- 1- to 4-unit properties
- Fannie Mae/Freddie Mac eligible condos
- Planned-unit-developments
- Modular homes
Note that the list does not include manufactured homes.
Co-signers
For loans with loan-to-value ratios over 90%, each co-borrower whose income is needed for qualification purposes must occupy the subject property as his primary residence. For loans with loan-to-value ratios of 90% or less, the co-borrower is not required to occupy the subject property as his primary residence.
If the co-borrower does not occupy the subject property as his primary residence, the maximum total debt ratio for the occupant borrower is 43%.
Maximum number of loans
While Fannie Mae guidelines allow you to finance up to ten residential properties, most lenders limit the number to four. The number of properties generally is not considered if you are financing (purchase or refinance) your primary residence.
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