New Conforming Loan Guidelines

By John | Published: March 11, 2008

Here are the much anticipated new guidelines set by Fannie Mae and Freddie Mac for the temporary increase to the conforming limit.

Loan Eligibility – Loans must be conventional first lien mortgages only

Loan Purpose	LTV	CLTV	Minimum Fico
Primary Residence	90%	90%	LTV > 80%: 700 LTV < 80%: 660
Rate/Term Refi	75%	95%	660
Second Home & Investment Prop.	60%	60%	660
Rate/Term Refi	60%	60%	660

Eligibility Requirements
Eligible Product	30 year fixed
Property Type	1 unit (SFR, PUD, Condo)
Reserves	Pimary residence = 2 months PITI payments Second Home & Investment prop. = 6 months PITI payments
Debt to Income Ratio	45% Max
Documentation	Full
Borrower Contribution	For purchase tranasactions, the borrower must contribute at least 5% from his or her own funds to the transaction, regardlessof the LTV
Interested Party Contrib	Max. of 3% is permitted for primary residence and second homes regardless of LTV Max of 2% is permitted for investment properties

Ineligible Products, Features, or Transaction Types

Cashout refi's
Cooperative Projects
Interest Only products
Temporary Buydowns
2-4 unit properties

Intial parameters introduced a couple of weeks ago indicated the 5/1 ARM and 5/1 interest only products would be part of the product scope, however these programs were not released at this time. It is possible these products could be forthcoming.

LTV – is the loan amount expressed as a percent of either the purchase price or the appraised value of the property.

CLTV -the proportion of loans (secured by a property) in relation to its value.

FICO – a credit score used by many mortgage lenders that use a risk-based system to determine the possibility that the borrower may default on financial obligations to the mortgage lender.

Loan Purpose	LTV	CLTV	Minimum Fico
Primary Residence	90%	90%	LTV > 80%: 700 LTV < 80%: 660
Rate/Term Refi	75%	95%	660
Second Home & Investment Prop.	60%	60%	660
Rate/Term Refi	60%	60%	660

Eligibility Requirements
Eligible Product	30 year fixed
Property Type	1 unit (SFR, PUD, Condo)
Reserves	Pimary residence = 2 months PITI payments Second Home & Investment prop. = 6 months PITI payments
Debt to Income Ratio	45% Max
Documentation	Full
Borrower Contribution	For purchase tranasactions, the borrower must contribute at least 5% from his or her own funds to the transaction, regardlessof the LTV
Interested Party Contrib	Max. of 3% is permitted for primary residence and second homes regardless of LTV Max of 2% is permitted for investment properties