Fannie Mae introduced a new 30 year and 15 year fixed home loan product exclusively for Fannie Mae bank owned properties (REOs) that will allow San Mateo County home buyers to purchase homes for as little as 3% down payment. The maximum loan amount is $417,000 for single family units.
Some Highlights of the Program
Some highlights of FNMA’s HomePath Conforming Loan financing for bank owned properties are:
- Single unit properties are eligible for a 3% down payment
- Mortgage insurance is not required, which means a lower monthly payment compared to the similar FHA home loan
- No appraisal is required
- Sellers can contribute up to 6% concessions towards closing costs and other prepaids, but buyer cannot get cash back at closing
- Minimum credit score of 580
What are the Program’s Limitations?
The FNMA HomePath conforming loan product will only make loans up to $417,000 for single unit properties and the property must be a Fannie Mae bank owned property. In San Mateo and Santa Clara Counties, this does limit the properties that are eligible, however, for those properties that do qualify, the FNMA HomePath Conforming product is a much better option than other, similar programs.
How Do I Determine if a Property is Eligible?
You can visit HomePath.com and input in the property’s address to determine which properties are eligible.
What are the Maximum Loan Amounts?
| No. of Units | Max Loan Amount |
|---|---|
| 1 | $417,000 |
| 2 | $533,850 |
| 3 | $645,300 |
| 4 | $801,950 |
Is this Program Better than FHA?
While the FNMA HomePath fixed rate product does have its limitations, it is a much cheaper loan than FHA loan program. The HomePath program does not require an appraisal and there is no mortgage insurance. FHA requires both. An appraisal can cost between $400 and $500 and depending on the loan amount, FHA can require two appraisals to be performed. FHA also requires two types of mortgage insurance. One is the upfront mortgage insurance premium of 1.75% of the Loan amount ($7,297.50 on a loan amount of $417,000) and a yearly premium of .55% of the loan amount paid on a monthly basis. Mortgage insurance is required for FHA loans for a minimum of 5 years and up until your loan compared to your value of your home reaches 78%. Not having to pay these premiums can be a substantial savings for the borrower.
An additional benefit with HomePath is that it only requires 3% down instead of 3.5% for an FHA Loan.
Can I Buy a Duplex or Triplex?
Yes, this program is available for purchase of a duplex with 5% down payment and loan amounts up to $533,850. For three-four dwelling units, a 25% down payment is required. Three unit dwellings can fetch loan amounts to $645,300 and four unit dwellings can get loan amounts up to $801,950.
What About Second Homes and Investment Properties?
The FNMA HomePath conforming loan product is also available for second homes and investment properties. Second homes require a 10% down payment for one unit properties and Co-ops. Investment properties will require a 10% down payment for 1-2 unit properties and a 25% down payment for 3-4 unit properties.
How Can I Determine if I am Eligible?
To determine if you are eligible for this loan program, fill out our secure online mortgage application or contact us by phone or email and we’ll send you the necessary information to get started today.
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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.
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