Fannie Mae

Federal National Mortgage Association, commonly referred to as “Fannie Mae” is a congressionally chartered secondary-mortgage market company that buys loans from private lenders. Because the firm is so big and has been involved in purchasing packages of loans from lenders for 25 years, it has enormous influence on the mortgage market.

Fannie Mae's [Community Home Buyers Program] allows first-time buyers with little cash to obtain 95 percent financing. Participants may put down as little as 3 percent of their own money, with the remainder permitted in the form of a gift from family members, a government program or nonprofit agency. Mortgage insurance is required on all loans above 80 percent loan-to-value ratio when borrowers do not use their own funds for at least 5 percent down.

The program is administered through participating lenders, and there are income limits in different states. However, the income restriction is waived when borrowers participate in the Fannie Neighbors program. Fannie Neighbors also has lower income requirements for borrowers who want to buy in designated central cities. Fannie Mae's Community Home Buyers program has an income cap of 120 percent of the area's median income. In addition, the borrower must attend a seminar on home ownership and the home buying process. It is not geared only for first-time homebuyers, unlike many of the other low-down -payment programs on the market.

Fannie Mae is expanding the availability of low-down-payment loans in an effort to help more people nationwide qualify for a mortgage. Two new programs will help potential buyers overcome two of the most common obstacles to home ownership, low savings and a modest income.

To address many first-time buyers' struggles to save the down payment, Fannie Mae developed Fannie 97. The program provides 97 percent financing on a fixed-rate mortgage with either a 25- or 30-year loan term through Fannie Mae's Community Home Buyers Program.

Fannie Mae's Start-Up Mortgage assists buyers with a 5 percent down payment who are at any income level. Yet applicants do not need as much income to qualify and less cash for closing than with traditional mortgages. Borrowers receive a 30-year, fixed-rate mortgage with a first-year monthly payment that is lower than the standard fixed-rate loan. Freddie Mac, Fannie Mae's counterpart, also offers low-down-payment loan programs.

For a list of participating lenders, call Fannie Mae at (800) 732-6643.

To learn more, contact one of our knowledgeable ASSOCIATES or email us at BUYINGINFO@SBAREALTY.US We look forward to partner up in servicing your real estate needs.

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