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Fannie Mae Alters Down Payment Rules

May 19, 2008

   Related Information
Announcement 08-10
National Down Payment Policy Replaces Maximum Financing in Declining Markets Policy [pdf]

Fannie Mae on Friday announced a new, national policy on down payment requirements for conventional, conforming mortgages the company will purchase or guarantee. Starting June 1, 2008, Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages processed through its automated underwriting system, and 95 percent loan-to-value ratios for loans underwritten outside of its system everywhere in the United States. Previously, Fannie Mae had required higher down payments in markets where home prices were declining. The new national down payment requirements of 3 or 5 percent will apply to loans for purchase of single-family, primary residences. Down payment requirements will vary for other occupancy, property and transaction types.

The company also said it has made changes to “more accurately reflect the current risks in the housing market and guard against the potential for foreclosure.” These changes include adjustments to credit risk assessment, loan-to-value ratios and down payment requirements. The company said it will continue to provide support for homebuyers that need down payment assistance.

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