Purchase Mortgage Fannie/Freddie LTV gap chart as of 2016
Hello,
I made this for myself and a few coworkers a few weeks back as a "cheat sheet," but thought I'd share it here. These are the baseline LTV caps for Fannie and Freddie purchase mortgages. Simple little thing, but I feel that it'll answer questions that currently get asked about 5 times a day on here.
Reminder that you can have more than 4 financed residential properties, as many as 10 in fact using Fannie, it just gets wonky for number 5 onwards. This is of course my best effort at compressing a whole lot of guidelines into a very small cheat-sheet, but it should cover the bulk of purchase scenarios.
Reminder #2 that any individual lender is allowed to be more restrictive than this, if they wish. They can be less restrictive too, it just wont be Fannie/Freddie rates and terms.
A couple things that jump out:
- "Zomg 90% LTV if I just call it a second home!!!" - If you do that and then immediately execute a 12 month lease with a tenant, or hand control over to a property manager, that's fraud and a horrible idea! However, do me a favor and ponder furnished rentals for just a moment, especially if you are someone that frequently travels for work and/or to scope out other real estate markets and/or to monitor your investment properties.
- If you're providing housing for your elderly parents and/or disabled child, and stick to Fannie, do me a favor and keep your eyes on that "Primary" chart. Those are the guidelines, interest rates, and LTV limits, that will apply. I really like this one because you're being rewarded for doing something you might be doing anyways -- providing housing for mom and dad in their golden years. Might as well get some equity and appreciation going while you're at it.
- Yup, 85% LTV for SFR investment properties... until you hit 4 financed properties. In fact a lot of that chart changes once you hit 5+ financed properties. Interest rate pricing isn't super great here at all, and of course there is PMI, but its still going to be a heck of a lot better than hard money.
- Yup, 80% LTV on 3-4 unit owner occupied properties.
- Yup, 85% LTV on an owner occupied duplex. PMI is generally dirt cheap here too. I like this one because it's hard in my market to get FHA minimal down payment offers accepted on duplexes.
Reminder again that individual lenders can and do have overlays that are more restrictive. I very intentionally always hang my license with firms that have as close to none as possible (the bulk of my current employer's overlays are for FICO<640 scenarios).
I don't believe this is a TILA-defined advertisement, but just in case, know that my license is only good in CA (you can physically be anywhere, I only lend on properties in California) and my NMLS # is 1220177 (BP is broken so I can't put that in my sig). This is not a commitment to lend, other restrictions apply, Fannie/Freddie can and do change their guidelines all the time without prior notice.
