Fannie Mae Underwriting Guidelines

The Federal National Mortgage Association, commonly known as Fannie Mae, is an organization that helps secure mortgages by purchasing them from lenders. This helps lower-income families buy homes when they might otherwise be unable to qualify for a mortgage. It was established in 1938, part of FDR's New Deal programs, as a Federal agency, then was converted to a private corporation in 1968. The organization has made it possible for thousands of families in the US to purchase homes who otherwise would not have been able to. In 2008, in the aftermath of the mortgage crisis, Fannie Mae was brought under the control of the Federal Housing Finance Agency, as was the Federal Home Loan Mortgage Corporation, also known as Freddie Mac.

The Fannie Mae underwriting guidelines help decide which mortgages can be purchased. Usually, Fannie Mae purchases loans in bundles once the individual loans have been determined to meet the appropriate guidelines. While guidelines can differ between individual independent mortgage lenders, Fannie Mae guidelines are consistent.

Some items included in the Fannie Mae underwriting guidelines are:

- The borrower's income and net worth
- The borrower's overall credit rating
- The borrower's employment status and history
- The amount borrowed

All of these elements must meet specific requirements before the mortgage can be turned over to Fannie Mae. These guidelines are used to estimate the buyer's ability to make the required monthly payments. Exact requirements change from time to time. For example, a revision in 2009 led to a change in the requirements for purchase of condominiums. Individual lenders will be aware of the most up-to-date guidelines and will be able to assist anyone requesting information regarding a particular loan.

It is quite common in the mortgage industry for mortgages to be bundled and sold to other organizations, including Fannie Mae. For this reason, many lenders will use requirements similar or identical to those used by Fannie Mae for all their mortgages. Ensuring all mortgage loans are eligible for purchase by Fannie Mae gives the lender more flexibility in dealing with the mortgage in the future.