What are Fannie Mae and Freddie Mac Guidelines on Home Mortgages?

Fannie Mae And Freddie Mac Foreclosure Guidelines On Conventional Loans: Borrowers can qualify for conventional loans after foreclosure, deeds in lieu of foreclosure, or short sales. However, there are mandatory waiting period requirements after a housing event to qualify for a conventional loan. The waiting period requirements after a foreclosure, deed in lieu of foreclosure, and short sale is set by Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac are the two mortgage giants in the United States. The roles of both Fannie Mae and Freddie Mac is to provide market liquidity in the mortgage markets. How does Fannie/Freddie provide liquidity in the mortgage markets?  They do so by being the two largest purchasers of mortgages by lenders. Lenders originate and fund loans using their warehouse line of credit.

After the loans are closed, lenders need to sell the loans they closed and fund on the secondary market. Most mortgage lenders will sell the loans they closed to larger mortgage bankers. The larger mortgage banker will purchase the loan from the lender. The larger mortgage banker will retain the servicing of the loans they buy by the lender and give the funds for the loans they bought.

The lender will pay the warehouse line with the proceeds of the loan they sold. Now since the warehouse line of credit is available, the lender is now fully liquid and originates more loans The larger mortgage banker will purchase more loans from smaller mortgage lenders and bundle them up and sell it to an aggregator like Fannie Mae and/or Freddie Mac. This is how Fannie Mae and Freddie Mac provide liquidity to the mortgage markets.

How Fannie Mae And Freddie Mac Provide Liquidity In The Mortgage Markets

As mentioned in the earlier paragraph, one of the main roles of Fannie Mae and Freddie Mac is to provide liquidity in the mortgage markets. Fannie Mae and Freddie Mac are the two largest buyers of mortgages on the secondary market. However, Fannie Mae and Freddie Mac only purchase conforming loans.

By conforming loans, the conventional loans they purchase need to conform to their agency mortgage guidelines. This includes the mandatory waiting period after foreclosure, deed in lieu of foreclosure, and short sales. Because of Fannie Mae and Freddie Mac, mortgage lenders always have liquidity and can offer mortgages to borrowers at competitive rates.

Fannie Mae and Freddie Mac are government-sponsored enterprises (GSE). Fannie Mae and Freddie Mac will only buy conforming loans that conform to their agency guidelines. This is why conventional loans are often referred to as conforming loans. Borrowers can qualify for conventional loans after a housing event. Fannie Mae and Freddie Mac have specific agency mortgage guidelines on conforming loans after a housing event.

Freddie Mac Guidelines Qualification Requirements

The Freddie Mac guidelines are a set of standards that must be met in order to qualify for a home loan. These guidelines cover everything from credit score requirements to employment history verification. In order to make sure you are getting the best possible deal on your home loan, it is important to understand the Freddie Mac guidelines and how they apply to you.

One of the most important aspects of the Freddie Mac guidelines is the minimum credit score requirement. In order to qualify for a home loan, you must have a credit score of at least 620. If your credit score is below this threshold, you will likely not be approved for a loan. However, if your credit score is above 620, you may still be able to get a loan with a higher interest rate.

Another important aspect of the Freddie Mac guidelines is employment history verification. Lenders will want to see that you have a steady job and income before they approve you for a loan. They may require you to provide pay stubs or tax returns in order to verify your income. Additionally, they may check your employment history to make sure you have not had any gaps in employment.

The Freddie Mac guidelines are just a few of the many factors that lenders will consider when determining whether or not to approve you for a home loan. If you are looking to get the best possible deal on your loan, it is important to understand all of the different guidelines that lenders use. By understanding the Freddie Mac guidelines, you can be sure that you are getting the best possible deal on your home loan.

Fannie Mae Guidelines Qualification Requirements

Fannie Mae is a government-sponsored enterprise that provides financial assistance to homeowners. In order to help make the mortgage process more accessible and affordable for everyone, Fannie Mae has compiled a list of guidelines that must be met in order for a home purchase to be approved.

The first guideline is that the borrower must have a minimum credit score of 620 in order to qualify for a loan. Secondly, the borrower’s debt-to-income ratio must not exceed 43%. This means that no more than 43% of the borrower’s income can go towards paying debts such as credit cards, car loans, etc.

Lastly, the borrower must have a down payment of at least 3% of the purchase price of the home. These are the three main guidelines that must be met in order to have a home purchase approved by Fannie Mae.

Fannie Mae and Freddie Mac downpayment Guidelines

Fannie Mae and Freddie mac Mortgage Standards

  1. Minimum Down Payment: 20% standard (as low as 3% with some loans)
  2. Loan Limits: Between $647,200 – $970,800 (based on area)
  3. Preferred DTI: 36% or lower
  4. Maximum DTI: 50%
  5. Mortgage Insurance: Private mortgage insurance (PMI) for loans with less than 20% down
  6. Mortgage Insurance Cost:  Pay between 0.2% and 2% of a loan’s annual value until you reach 78% LTV
  7. Eligible Properties: Primary residence, second home, investment or rental properties
  8. Income Requirements: 2 years of income preferred (can be waived at lender’s discretion)

Difference Between Foreclosure Versus Deed In Lieu And Short Sale

Fannie Mae and Freddie Mac differentiate housing events, unlike government mortgages. FHA, VA, and USDA will categorize and have the same waiting period after a housing event. The waiting period after foreclosure, short sale, or deed in lieu of foreclosure is three years from the recorded date of the housing event on FHA and USDA loans.

The waiting period after foreclosure, a deed in lieu of foreclosure, and a short sale is two years on VA loans. However, per Fannie Mae and Freddie Mac Agency Mortgage Guidelines, the waiting period after foreclosure to qualify on a conventional loan is seven years from the recorded date of the housing event.

If the borrower had a prior deed in lieu of foreclosure and/or short sale, the waiting period is four years from the date of the DIL and/or short sale to qualify for a conventional loan. The reduction of the waiting period is significant on a short sale and deed in lieu of foreclosure versus a regular foreclosure on conventional loans.

Fannie Mae And Freddie Mac Waiting Period Guidelines On Mortgage Included In Bankruptcy

Per Fannie Mae and Freddie Mac Agency Mortgage Guidelines, if a borrower had a prior mortgage included in a bankruptcy, and the mortgage was not reaffirmed, there is a four-year waiting period requirement after the bankruptcy discharge date to qualify for conventional loans.

  • You cannot have reaffirmed the mortgage
  • The mortgage gets discharged and the home eventually gets foreclosed, and/or deed in lieu of foreclosure, and/or short sale
  • The date of the housing event does not matter
  • As long as the mortgage was included in bankruptcy and the mortgage was not reaffirmed, the waiting period start date is four years from the discharge date of bankruptcy
  • This rule only applies to conventional loans and not government loans

Under HUD Agency Guidelines, if you had a mortgage included in bankruptcy without having the mortgage reaffirmed, the waiting is three years from the recorded date of the housing event to qualify for an FHA loan. The discharge date of bankruptcy does not matter.

Non-QM Mortgages One Day Out Of Foreclosure And Bankruptcy

Non-QM and alternative home mortgage programs are making a major comeback in today’s hot housing market. Non-QM mortgages one day out of foreclosure and bankruptcy is becoming more popular in today’s booming housing market. Now homebuyers who have reestablished themselves after foreclosure and/or bankruptcy can qualify for non-QM mortgages one day out of foreclosure and/or bankruptcy. 30% down payment on a home purchase is required.

However, as the foreclosure and/or bankruptcy ages, the down payment requirement gets lower. For more information about the contents of this article and/or other mortgage-related questions, please contact us at Capital Lending Network, Inc. at  888-900-1020 or text us for a faster response. Or email us at @contact@capitallendingnetwork.com. The team at Capital Lending Network, Inc. is available 7 days a week, evenings, weekends, and holidays.

Capital Lending Network, Inc. has a national reputation for not having any lender overlays on government and conventional loans. We have a reputation of being a one-stop mortgage shop due to having every non-QM and alternative mortgage program available in the market besides FHA, VA, USDA, and Conventional loans.

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Peter is a licensed Mortgage Loan Originator and Realtor. He helps people to meet FHA guidelines and obtain a financing for their dream home.

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