Fannie Mae Guideline Change Not As Super As It Seems

January 11, 2011 by · Leave a Comment 

Fannie Mae recently issued a guideline change that sure seemed like fantastic news for the real estate industry.  In the past on a Conventional loan, if the borrower received a gift, the borrower still had to come up with at least 5% from their own funds unless the borrower put 20% or more down.  Fannie Mae declared that moving forward, all funds on a Conventional loan can come from a gift even if the borrower puts less than 20% down!  What seemed like super news is not so super though as the Private Mortgage Insurance (PMI) companies are not honoring this change at this time making the change, well, worthless.  A head underwriter with a leading PMI firm confirmed last week that none of the PMI companies have changed their guidelines thus far.  Hopefully, at least one of the PMI companies will choose to adopt this guideline change in the near future.  Until that happens though, FHA remains the loan of choice for a borrower receiving a gift for down payment who does not have at least 5% from his/her own savings.  Although this is not as great of news as it first seemed, what should not be missed is that THE major player in the mortgage industry (Fannie Mae) just came out with a significantly more lenient guideline and that in and of itself is good news and a step in the right direction!

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