Fannie Home Path

Fannie Home Path

The Fannie Mae HomePath® program is a fixed-rate, fully amortizing loan program that provides the financing for properties that are owned by Fannie Mae as a result of foreclosure or other similar action such as a deed-in-lieu.          

• Low down payment minimum of 3% down payment is required which can be funded by the borrower’s own savings, a gift, a grant or a secured loan from a nonprofit organization, state or local government or employer
  
• No appraisal required
  
• No mortgage insurance required
• Expanded seller contributions for closing costs allowed 
  

LOAN-TO-VALUE

Primary Residence Purchase

• 1 Unit 97% LTV with 660 minimum credit score and 80% with 620 minimum credit score
• 2 Units 85% 660 with  minimum credit score and 80% with 620 minimum credit score
• 3-4 Units 75% LTV with 620 minimum credit score

Second Home Purchase

• 1 Unit 90% LTV with 700 minimum credit score 80% LTV with 620 minimum credit score

Investment Property Purchase

• 1 Unit 85% LTV with 700 minimum credit score 
• 80% LTV with 620 minimum credit score
• 2-4 Units 75% LTV 620 minimum credit score

PROGRAM GUIDELINES 

Owner-occupied Primary Residences, Second Homes & Investment properties are eligible:

• Purchase transactions of owner occupied 2-4 unit properties are subject to the following: 
• 2 units: Borrowers may not own any other residential property of equal or greater value in the same area in which the units are located. The mailing address and property address must be verified as the same. If this verification cannot be made, the property must be treated as an investment property.
• 3-4 units: The loan documentation (credit report, income/asset verification) must show the subject property as the borrower’s address. ·        

The Homeowner’s insurance policy must show that the mailing address and subject property are the same. The purchase contract must show the borrower’s intent to occupy.

SELLER CONTRIBUTIONS

Interested party contributions, as a percentage of the sales price or appraised value, whichever is less, are limited to the following values.

Occupancy LTV/CLTV Maximum Seller Contributions

• Primary Residence up to 97% maximum 6% contribution
  
• Less than 75% LTV maximum 9% contribution
• Second Homes 75.0 up to 97% maximum 6% contribution
• Less than 75% LTV maximum 9% contribution
• Investment Properties All LTVs 2%

Self Employed Borrower

• Self employed borrowers must be self employed for a minimum of 2 years     
• Signed and dated copies of the borrower’s individual (and business if applicable) tax returns, including all schedules, for the pervious 2 years
• A YTD Profit & Loss Statement and Balance Sheet.

Non-Wage Earner Requirements

• If the borrower’s income is from sources such as retirement, social security, disability, child support or alimony, the file must be documented with evidence of receipt and proof of continuance for a minimum of 3 years.

The following are required for all borrowers

• 2 year employment history      
• At a minimum 1 year of income documentation is required and a recent paystub reflecting year-to-date earnings is required for each qualifying borrower     
• Income must be documented        
  

Foreclosure

Foreclosures in the last 7 years are not eligible.

Bankruptcy

Bankruptcy in the last 4 years is not allowed. Multiple bankruptcies in the last 7 years are not acceptable.

Short Sale/Short Payoff

A short sale or short payoff related to a delinquent mortgage obligation is not allowed within the last 7 years.

Disputed accounts

In order for the loan to be eligible, disputed account(s) must be removed from credit and re-run through DU to obtain Approve/Eligible results. 

Collections and Charge-offs

In certain cases, collection and charge-off accounts will be reflected in amounts that have no material effect on the priority of the lien; therefore, collection or charge-off accounts do not have to be paid off at or before closing.  

Qualifying Ratios

The standard debt-to-income ratio is 45%. The maximum debt-to-income end ratio is 50%.  

Assets Documentation

• 2 months bank statements

Cash Reserves

• First Time Homebuyers Primary Residence 2 months
• If the borrower’s current primary residence is pending sale or is being converted to a second home or investment property, reserves of 6 months for both the retained and the subject property are required.

Second home or investment property transactions

• For second home or investment property transactions where the borrower has multiple financed properties, the borrower must provide an additional 2 months of verified reserves for each additional property.

GIFTS/DOWN PAYMENT

There is no minimum borrower investment required when the following apply: 

• Primary residence up to 95% LTV%    
  
• 2-4 units less than 80% LTV     
• Second homes less than 80% LTV

A minimum 5% investment from the borrower’s own funds is required when:         

• Primary Residence more than 95% LTV
• High balance mortgages on primary residences with LTVs > 80% ·         Second homes with LTV > 80% ·        

All investment property transactions NOTE:

• Gifts not allowed on Investment properties
  

Rent Loss Insurance

If rental income is used to qualify, 6 months rent loss insurance coverage is required. This includes rental income on 2-4 unit owner occupied properties.  

Mortgage Insurance

Mortgage Insurance is not required on the Fannie Mae HomePath®.

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