BUYING TIPS: UNDERWRITING GUIDELINES -
FHLMC
MAXIMUM MORTGAGE AMOUNT (Based on loan program and cost area.)
$207,000 ($310,500 in Alaska, Guam, Hawaii, and U.S. Virgin Islands)
QUALIFICATION RATIOS
Total Housing Expense Ratio 28%. Total Debt Expense Ratio 36%.
UNDERWRITING RATIOS BASED ON
Gross monthly income.
The following income can be considered to the extent such payments are likely to continue
for a minimum of 3 years: Social Security income, alimony, public assistance payments,
child support or maintenance payments.
COMPENSATING FACTORS that can justify higher underwriting ratios (These
lists are not all-inclusive or in order of priority.)
Energy efficiency of the property or energy-efficient items.
Ability to devote a greater portion of income to basic needs such as housing expenses.
Demonstrated ability to maintain a good credit history, accumulate savings, and maintain a
debt-free position.
Large cash downpayment on the purchase of the property.
Potential for increased earnings due to education or job training.
Net worth substantial enough to show an ability to repay the mortgage.
Amount, nature, and duration of child support payments.
Rent paid by extended family members living in the house.
Existence of verified income not included in stable monthly income.
BANKRUPTCY POLICIES
Same as FNMA, in addition:
The seller's file must contain copies of the bankruptcy petition, schedule of debts, and
discharge.
Evidence to indicate that all debts not satisfied by the bankruptcy have been paid.
Written statement from the borrower satisfactorily explaining the causes of the
bankruptcy.
Any other evidence necessary to support the seller's determination that the borrower has
reestablished and maintained a satisfactory credit record.
INVESTOR LOANS
Lenders must negotiated commitments with FHLMC for investor loans.
REFINANCES No Cash-Out:
In refinances for interest rate and term changes, maximum LTV ratio is 90%.
Equity (Cash Back):
Maximum loan-to-value ratio 75%. No investors.
Second Home:
70% LTV. All borrowers restricted to no cash out loans.
MINIMUM DOWNPAYMENT
5% minimum equity from borrower unless family gift is equal to or greater than 20% of
value.
SELLER CONTRIBUTION LIMITS
3% on 90% or greater loans (principal residence).
6% if LTV ratio is 90% or less (principal residence and second homes).
ANNUAL PAYMENT INCREASE LIMITS
Scheduled (GPMs)
Lenders must negotiate a loan commitment.
Scheduled (Buydowns)
Annual increase may not exceed the greater of 7.5% or the amount that results from a one
percentage point increase in the effective interest rate.
Unscheduled (Capped 1-year ARMs)
1% or 2% change per year.
Required net life-of-the-loan cap is established by Freddie Mac.
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