Conventional & HARP
Conventional Mortgage / Fannie Mae Mortgage (FNMA) Purchase Program:
The FNMA mortgage program’s maximum loan to value (LTV) is 95%. The FNMA program does now have an “upfront mortgage insurance premium” compared to the FHA program. Also, if the LTV is 80% or less there is annual / monthly mortgage premium payment as compared to the FHA mortgage program.
There are also lender paid mortgage insurance programs for LTV over 80%, that will have a slightly higher interest rate, which may be the best option for the homebuyer. These programs should be compared to the FHA program to determine which program may be the best option for the homebuyer.
Seller concession maximum is 3% for mortgages with ltv greater than 90%, and 6% with LTV between 75% to 90%.
Rate and Term Refinance:
LTV is capped at 95%. This is strictly to lower the current interest rate.
Cash Out Refinance:
LTV is capped at 85%. This is a consolidation debt mortgage or cash out loan to fix up a homeowner’s home, or taking out moneys for any other reasons.
HARP – Home Affordable Refinance Program
(The following information came directly from Fannie Mae’s Website.)
HARP is unique—it’s the only refinance program that enables eligible borrowers with little to no equity in their homes to take advantage of low interest rates and other refinancing benefits. There have been several changes to HARP, but the primary enhancement removed the limit on the amount that homeowners could be “underwater” (owe more on their mortgage than their home is worth). With that change, many homeowners who were not eligible will now qualify. Program ends December 31, 2015.
HARP may be an option if:
- You have had a good payment history for the past 12 months. That means having no late payments in the last 6 months and no more than one 30-day late payment from 6 to 12 months ago.
- Your home is your primary residence, 2nd home or investment property.
- Your home value has decreased.
- You have limited equity or your first mortgage exceeds the current market value of the home (i.e., your loan-to-value ratio must be > 80% to be eligible).
- Your loan is owned or guaranteed by Fannie Mae or Freddie Mac. Check the Fannie Mae Loan Lookup tool.
- Your loan was closed on or before May 31, 2009 (this date can be found using the loan lookup results).