Fannie Mae Announces Guidelines for Loan Limits in High Cost Areas

Fannie Mae Announces Guidelines for Loan Limits in High Cost Areas

On March 30, 2009, Fannie Mae issued Announcement 09-08, implementing the 2009 conforming loan limits for high cost areas ("high-balance" loans above $417,000). The American Recovery and Reinvestment Act (ARRA) raised loan limits for high cost areas for 2009 to the higher of the permanent limits in effect for 2009 or the temporary limits in effect for 2008. In most cases the 2008 limits are higher. The guidelines apply to loans delivered to Fannie Mae starting May 1, 2009.

The Fannie Mae announcement specifies eligibility requirements for high-balance loans, including:

—Loan must be conventional, first-lien mortgages only.

—One to four unit properties are eligible.

—Loans must be fixed-rate or adjustable rate loans (no balloons).

—Loans must meet loan-to-value (LTV) and minimum credit score requirements. For one unit properties with a fixed rate mortgage, the maximum LTV is 90% and the minimum credit score is 700 for LTVs above 75% and 660 for LTVs at or below 75%. For one unit properties with an adjustable rate mortgage, the maximum LTV is 75% and the minimum credit score is 680. For second homes and investment properties, the maximum LTV is 65% and the minimum credit score is 740. Other rules apply to other categories.

Fannie Mae Announcement 09-08, Temporary High-Cost Area Loan Limits and Revised
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Eligibility Requirements for High-Balance Mortgage Loans