Fannie Mae Guidelines: What You Need to Know

Written by  Alaya Linton

Edited by  Timothy Manni

+ 1 More

Updated May 29, 2026

If you’re applying for a conventional mortgage, understanding Fannie Mae guidelines can help you avoid surprises during the home loan process. Fannie Mae sets many of the underwriting standards lenders use for conventional loans, including rules for credit scores, down payments, debt-to-income ratios and loan limits. While lenders can add stricter requirements of their own, Fannie Mae’s guidelines largely shape who qualifies and what terms borrowers receive.

Whether you’re buying your first home, refinancing or planning ahead, knowing how Fannie Mae guidelines work can help you strengthen your application, compare lenders more effectively and understand the best mortgage options available to you. 

What is Fannie Mae?

The Federal National Mortgage Association — Fannie Mae, for short — is one of two government-sponsored enterprises (GSEs) that help set the rules for most conventional home loans. Conventional loans aren’t guaranteed by any government agency, but lenders follow rules set by both GSEs, Fannie Mae and Freddie Mac. 

Fannie Mae doesn’t lend money directly to borrowers. Instead, it buys mortgages from lenders, which gives those lenders more cash to fund new home loans. In exchange, lenders must follow Fannie Mae’s guidelines when issuing many conventional loans, including rules related to credit scores, debt-to-income (DTI) ratios, down payments and loan limits.

For borrowers, that means Fannie Mae’s standards play a major role in determining who qualifies for a conventional mortgage and what terms they receive. Whether you’re buying, refinancing or even selling a home, understanding Fannie Mae guidelines can help you better prepare for the mortgage process. 

Fannie Mae guidelines: At a glance

The Fannie Mae Selling Guide details the rules lenders must follow and use to determine your eligibility for a Fannie Mae mortgage. The rules may change in response to major economic events. For example, during the COVID-19 pandemic, lenders adjusted employment verification rules since many people were laid off or their companies were closed temporarily.

Below, we cover the minimum mortgage requirements for conventional purchase and refinance loans:

Fannie Mae guidelines for purchase loans

Down payment

You’ll need at least a 3% down payment for Fannie Mae’s HomeReady® and standard loan programs for a primary residence, single-family home. The programs allow gift funds from family members and down payment assistance if you don’t have enough money saved up. Higher down payments of 5% or more are required for second homes, investment properties, two- to four-unit homes, adjustable-rate mortgages and repeat homebuyers who don’t meet HomeReady’s income limits.

Credit score

For most conventional loans, Fannie Mae guidelines no longer have a set minimum credit score (previously 620). Rather, its automated underwriting system relies on an internal review of your credit reports along with additional risk factors. However, for manually underwritten conventional mortgages, the minimum credit score is still 620. In both cases, you’ll qualify for better mortgage rates and lower private mortgage insurance (PMI) premiums with a higher credit score.

Waiting periods

You’ll need to wait up to seven years after a foreclosure to take out a conventional loan. A Chapter 7 bankruptcy will require a four-year waiting period before you can qualify. You may want to consider an FHA loan if you want to buy a home sooner; the waiting period is only two years after a Chapter 7 bankruptcy and three years after a foreclosure.

Debt-to-income (DTI) ratio 

Your DTI ratio is calculated by dividing your total monthly recurring debt (including your new mortgage payment) by your gross monthly income and multiplying the result by 100 to get a percentage. Although 45% is the standard maximum, lenders may accept a DTI ratio up to 50% if you have higher credit scores and ample cash reserves.

Cash reserves

Also called mortgage reserves, conventional lenders may require proof that you have up to six months of mortgage payments set aside to cover your mortgage if you encounter tough financial times. You may be required to prove you have the money for reserves if:

Income

Two years of employment is the standard requirement, but borrowers with less than two years of employment may qualify for a mortgage with a new job under certain conditions. Self-employed borrowers may need to provide additional financial documents to verify their income.

Income limits

The HomeReady loan is the only Fannie Mae loan program with income limits. Check the limits in your area to see if you’re eligible.

Loan limits

The Federal Housing Finance Agency (FHFA) sets conforming loan limits each year based on changes in average home prices. As of 2026, the maximum conforming single-family Fannie Mae loan limit is $832,750  in most parts of the country. Mortgages with higher limits, called “jumbo loans,” are available in higher-cost areas of the country.

Home appraisal

You’ll generally pay between $300 to $500 for a home appraisal on a purchase. In some cases, Fannie Mae may allow a “value acceptance” option in which your lender does not have to order an appraisal. This option is unique to conventional loans. FHA loans, VA loans and USDA loans) and typically require home appraisals.

Title

Fannie Mae guidelines require a search of your property’s title history to ensure it’s free of any ownership claims from previous owners or any judgments or liens, such as unpaid property taxes. Title insurance is required to cover the sales price on a purchase or the loan amount on any Fannie Mae refinance loan. 

Property types

Conventional loan requirements allow you to finance a home with up to four units in a regular subdivision, a co-op, a condominium building or a planned unit development (PUD). Fannie Mae also offers a manufactured home loan program for manufactured homes attached to a permanent foundation.

Occupancy types

You can use a Fannie Mae loan to buy a primary or secondary residence, or an investment property, while government-backed loans only allow you to buy a primary residence. One caveat: The down payment requirements are higher for second homes (10% minimum) and investment properties (15% minimum).

Mortgage insurance

A big advantage of conventional mortgages is that they don’t require mortgage insurance with a 20% down payment, while loans backed by the FHA require it regardless of your down payment amount. Conventional PMI usually costs between $30 and $70 for every $100,000 you borrow, depending on your down payment, credit score and loan amount. It’s typically added to your monthly payment, but can be paid in a lump sum or financed into your interest rate.

Fannie Mae guidelines for refinance loans

Whether you’re refinancing to lower your payment, pay off your balance faster or tap equity for home improvements, you’ll need to know the Fannie Mae rules to make sure you qualify.

Refinance purpose

Fannie Mae sets different rules depending on the “purpose of your refinance.” In general, the rules are more stringent if you’re borrowing more than you currently owe to pocket some cash — known as a cash-out refinance. A rate-and-term refinance replaces your current loan with a new mortgage at a better rate, shorter term (such as switching from a 30-year to a 15-year mortgage) or a “safer” loan, such as refinancing an adjustable-rate mortgage (ARM) to a fixed-rate loan.

LTV ratio

Your loan-to-value (LTV) ratio is a measure of how much of your home’s value is being borrowed. When you’re refinancing, the higher your LTV ratio, the greater the risk that the lender will lose money if you default and they have to foreclose.

Fannie Mae sets maximum LTV ratios based on refinance type and property type:

Credit scores and waiting periods

Credit requirements for refinances processed through automated underwriting are the same as for purchases, while the minimum credit score for manually underwritten refinances is 620 for rate-and-term and 640 for cash-out. Bankruptcy and foreclosure waiting periods are the same as for purchases. Notably, credit scores affect refinance rates more significantly than purchases.

DTI ratio

The maximum DTI ratio is 50%; 45% for manually underwritten refinance loans. 

Cash reserves

The same rules that apply to purchase loan reserves apply to most refinance loans, although manually underwritten refinances can require up to 12 months of cash reserves, depending on property type, credit score and DTI. All cash-out refinances with DTI ratios of 45% or higher require proof of six months of payment reserves.

Home value

As with a purchase transaction, your lender will order an appraisal to determine the property’s value, though some refinances may qualify for value acceptance, which establishes value without an appraisal.

Title

Your refinance lender will check for new liens on your home and require a new title insurance policy. You may have to jump through extra hoops if you’ve taken out a HELOC or a home equity loan on the house.

Property types

Fannie Mae sets lower LTV ratio limits on refinancing the following property types:

Second homes

Investment properties

Two- to four-unit homes

Manufactured homes

Occupancy types

Second homes and investment properties come with some extra guidelines. In general:

You’ll be restricted to a lower LTV ratio

You’ll need more cash reserves to qualify

You’ll need a stronger credit profile to qualify

Mortgage insurance

You’ll need mortgage insurance if your refinance LTV ratio is more than 80%.

Pros and cons of a Fannie Mae mortgage

How to apply for a Fannie Mae loan

To get a Fannie Mae mortgage, you must fill out the Uniform Residential Loan Application. You’ll need to provide the following information:

Fannie Mae automated vs. manual underwriting

Most conventional loans backed by Fannie Mae are approved through its automated underwriting system, Desktop Underwriter (DU), which evaluates your credit, income, assets, debts and other loan details to assess risk. Certain higher-risk loans — including those with LTV ratios above 95% — are required to receive a DU “Approve” recommendation to qualify.

If your loan doesn’t receive an automated approval, manual underwriting may be available in limited cases, although not all lenders offer this option. Borrowers with higher DTI ratios, borderline credit or other risk factors may need to provide additional documentation or show “compensating factors” — such as strong cash reserves, stable income or a larger down payment — to strengthen their application.