he Fannie Mae Selling Guide has been updated to include a number of changes to its core programs. In general, the changes are aimed at expanding mortgage eligibility to more homeowners and buyers. The updates are described in more detail below:
Fannie Mae is introducing the HomeReady Mortgage as its enhanced affordable lending product. It is set to replace the MyCommunityMortgage (MCM) product, launched back in 2001. Some of MCM’s eligibility and underwriting flexibilities have been transitioned into standard policy over time. Fannie Mae has recognized the continuing need to provide more access to credit for creditworthy borrowers, and has developed new or revised loan and borrower eligibility requirements and underwriting flexibilities aimed at low to moderate-income borrowers and buyers in its new HomeReady Mortgage product. It is intended to help lenders, nonprofit organizations, housing finance agencies, and other affordable housing advocates serve today’s market and support sustainable homeownership.
The following list highlights some of the major policy changes that have been incorporated into the HomeReady Mortgage program:
- Income limits – General income limit of 80% of area median income (AMI) to align with Fannie Mae’s housing goals. Eligibility is also provided for properties located in low-income census tracts with no borrower income limits, and up to 100% of AMI for properties located in high minority census tracts or designated disaster areas.
- First-time home buyer – The requirement that at least one borrower must be a first time home buyer has been removed for one-unit principal residence loans with LTV ratios greater than 95% up to 97%.
- Non-occupant co-borrowers – Now permitted for qualifying purposes.
- Rental income – Rental income from an accessory unit may be considered in qualifying the borrower.
- Manufactured housing – One-unit manufactured home properties will be permitted as an eligible property type for principal residence transactions. The maximum LTV and CLTV ratios for manufactured housing apply.
- Renovation – HomeStyle Renovation mortgages will be permitted for principal residence transactions. The maximum LTV and CLTV ratios for HomeStyle Renovation apply.