Equal Housing Lender
Both Fannie Mae and Freddie Mac GSE’s Offering Unique Loan Products to Boost Affordable Housing
Pam Marron • Sep 15, 2021
Lower Interest Rates for Clients with 80% Area Median Income (AMI) limits are being offered by Fannie Mae now and Freddie Mac in August. Plus, Freddie Mac is offering lower down payment for 2-4 Unit Homes and Eased Manufactured Housing Guidelines on November 15th.
Fannie Mae’s RefiNow available as of June 5, 2021 and Freddie Mac’s Refi Possible available on August 30, 2021 will offer lower interest rates for refinancing Government Sponsored Enterprise (GSE) loans for homeowners that have income that is 80% AMI or less. Prior to these new loan programs, borrowers paid higher prices for lower loan amounts.
Changes to Lower Income Refinancing Programs
Common underwriting criteria for Fannie Mae REFINOW and Freddie Mac Refi Possible are:
- Borrower cannot be more than 30 days delinquent in the last six months and no more than one 30-day delinquency in the last 12 months.
- The property must be owner-occupied and property types include single family residences, condos and manufactured homes.
- Minimum credit score of 620 is required.
- Monthly Debt to Income (DTI) can go as high as 65%!!! THIS IS A BIG DEAL!
- Pricing provides at least a 50 basis point (BP) reduction towards interest rate
- Existing Private Mortgage Insurance (PMI) can also be reduced
- Borrower can finance up to $5000 in closing costs and prepaids, but cash-out is limited to $250.
- An appraisal waiver is possible at lower Loan to Values (LTV).
- There is no maximum housing expense-to-income ratio. THIS IS ALSO A BIG DEAL!
Changes To Multi Unit LTVs
On November 15th, Freddie Mac will lower down payment for 2- to 4-unit homes. In the past, maximum loan-to-value ratios were limited to 85% LTV for the 1st mortgage or up to 95% Combined Loan to Value (CLTV) with an acceptable 2nd mortgage. The change also increases the limit to as high as 105% CLTV for borrowers getting down payment assistance from a subsidized source. If the subsidized amount is not available, the borrower must contribute funds of their own for at least 3% of the loan amount for a maximum 95% LTV.
Changes To Manufactured Housing Loan Programs
Additionally, Freddie Mac will ease guidelines for manufactured housing loans. Also, multi-family units through the GSE’s required a higher LTV with down payment as high as 25% even when the property is owner-occupied.
All of these programs are being implemented by the current administration to boost affordable housing and increase owner-occupied homeownership.
If you are a client, loan originator or realtor who wants to learn more about these programs,
contact us today or
call 727-534-3445.
Pamela M Marron, NMLS#246438
Innovative Mortgage Services, Inc, NMLS#250769
Down Payment Connect is already being used by MLOs and Realtors. Now it's available to HUD Counselors through HomePrep! Down payment assistance is quickly rising to the top need for clients wishing to purchase a home. Down Payment Connect , the back-end data provider for the parent Downpaymentresource.com , houses every down payment assistance program in the US and provides extremely detailed information laid out in a consistent format for each DPA program in their system. Throughout the last two years, Downpaymentresource.com administrators have worked with MLO’s and the HomePrep developers to add nearly all wholesale down payment assistance programs to their platform and they didn't stop there! Extensive filters that allow for selection of specific client needs such as type (ie. SFR, manufactured homes, condos, multi-family, ADU’s), uses like renovation, above AMI income levels, non-1st time homebuyers are just a few of the filters you will find along with stand alone 2nd mortgages, combined 1st and 2nd mortgages and grants. DownpaymentResource.com is also in many MLS systems across the US and provides limited directory information and a free landing page for realtors to promote that they use DPA. Both MLO’s and realtors can subscribe to Down Payment Connect to get more of the extensive directory and back-end tools. Now, through HomePrep, HUD counselors can also use the Down Payment Connect system to filter trhough DPA programs that clients are qualified for, and can even provide wholesale programs when working with an independent loan originator (often called a mortgage broker)! Through HomePrep, HUD counselors are now able to provide MLO’s and clients with the DPA programs that they have found the client is eligible for.
If you have FFEL Student Loans, Take Action Before April 30th!
Three great tools that mortgage loan originators (MLO) can use to assist clients who need help with credit, down payment assistance and student loan repayment services have been used, fine-tuned and are already in use with individual MLO’s. These tools combined with the Freddie Mac HomeCoach automated system along with budgeting help and Homebuyer Education are all integrated in the HomePrep online platform that connects MLO’s with clients who have challenges to HUD counselors that get them mortgage ready.
Pam Marron, NMLS# 246438
Innovative Mortgage Services, Inc. NMLS# 250769
