Fannie Mae’s RefiNow available as of June 5, 2021 and Freddie Mac’s Refi Possible available on August 30, 2021 will offer lower interest rates for refinancing Government Sponsored Enterprise (GSE) loans for homeowners that have income that is 80% AMI or less. Prior to these new loan programs, borrowers paid higher prices for lower loan amounts. 

Changes to Lower Income Refinancing Programs

Common underwriting criteria for Fannie Mae REFINOW and Freddie Mac Refi Possible are: 

• Borrower cannot be more than 30 days delinquent in the last six months and no more than one 30-day delinquency in the last 12 months. 
• The property must be owner-occupied and property types include single family residences, condos and manufactured homes. 
• Minimum credit score of 620 is required. 
• Monthly Debt to Income (DTI) can go as high as 65%!!! THIS IS A BIG DEAL!
• Pricing provides at least a 50 basis point (BP) reduction towards interest rate
• Existing Private Mortgage Insurance (PMI) can also be reduced
• Borrower can finance up to $5000 in closing costs and prepaids, but cash-out is limited to $250. 
• An appraisal waiver is possible at lower Loan to Values (LTV). 
• There is no maximum housing expense-to-income ratio. THIS IS ALSO A BIG DEAL!

Changes To Multi Unit LTVs

On November 15th, Freddie Mac will lower down payment for 2- to 4-unit homes. In the past, maximum loan-to-value ratios were limited to 85% LTV for the 1st mortgage or up to 95% Combined Loan to Value (CLTV) with an acceptable 2nd mortgage. The change also increases the limit to as high as 105% CLTV for borrowers getting down payment assistance from a subsidized source. If the subsidized amount is not available, the borrower must contribute funds of their own for at least 3% of the loan amount for a maximum 95% LTV.

Changes To Manufactured Housing Loan Programs

Additionally, Freddie Mac will ease guidelines for manufactured housing loans. Also, multi-family units through the GSE’s required a higher LTV with down payment as high as 25% even when the property is owner-occupied.

All of these programs are being implemented by the current administration to boost affordable housing and increase owner-occupied homeownership.

If you are a client, loan originator or realtor who wants to learn more about these programs, contact us today or call 727-534-3445. 

Pamela M Marron, NMLS#246438

Innovative Mortgage Services, Inc, NMLS#250769