Understanding Fannie Mae Mortgages: Who Has Fannie Mae Mortgages and How to Get Them
What is a Fannie Mae Mortgage?
You may have heard a lot about Freddie Mac and Fannie Mae in the news lately, but you may not be sure exactly what makes a Fannie Mae Mortgage and the Fannie Mae process different from other mortgages.
Fannie Mae is another name for Federal National Mortgage Association, which was originally established in 1938 after the Great Depression. Fannie Mae is a government-sponsored enterprise (GSE), which was chartered by Congress to provide stability to the U.S. housing and mortgage markets.
Where Can You Get Fannie Mae Mortgages
Fannie Mae does not help home buyers this by lending to consumers directly, so you need to understand who has Fannie Mae mortgages. Instead of making loans, Fannie Mae purchases mortgage loans from banks, mortgage brokers, and other organizations and bundles these loans with other loans. Fannie Mae then sells these mortgage loans to investors, who in turn earn income from the interest that homeowners pay on their mortgages. Fannie Mae uses the money it gains from these loan sales to make more money available to future mortgage borrowers.
Types of Fannie Mae Mortgages
- Single-family Homes
- Housing and Community Development Projects
- Capital Markets
Fannie Mae offers a variety of loans and services to various business partners. Together, these partners, along with Fannie Mae, increase the amount of money available to make rental housing units and home ownership available and affordable. This can help to benefit everyone, as it makes home ownership easier and more affordable for society as a whole.
The Fannie Mae Mortgage Process
Fannie Mae does not purchase all forms of loans. Fannie Mae has a series of criteria that a mortgage must meet to be eligible for Fannie Mae backing. Loans that meet these criteria are known as “conforming” loans. You can visit the Fannie Mae web site to determine if your particular loan has been backed by Fannie Mae. Your loan is not likely to be backed by Fannie Mae, or it is “non-conforming” if it falls under one of these categories:
- Large, or “jumbo” mortgages typically are not conforming to Fannie Mae guidelines. These loans are defined as $417,000 or more, and because they are not underwritten by Fannie Mae, will have higher interest rates associated with them.
- Home characteristics – if this is a vacation home or an investment property, it will be a non-conforming loan and will carry with it a higher interest rate.
- Credit issues – Fannie Mae typically requires a minimum credit score of 650 or higher, and 720 or higher for its best interest rates. If your credit scores are considerably lower than this, you may not qualify for a conforming loan through Fannie Mae.
You can also learn more about FHA guidelines for mortgages and for the rules for the government purchase of mortgage loans here.
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Article Reference: Fannie Mae.com