The Get Home Denver Team

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Fannie Mae has announced that they are lowering the maximum loan-to-value (LTV) ratios for a number of loan types. The three changes that will have the most impact follow:

Principal residence, cash-out refinance: Current max is 90%, new max is 85%. This means that if you refinance your primary residence, you can’t get more than 85% of the value if it’s a cash-out transaction.

Investment property purchase: Current LTV max is 90%, new max is 85%. This means purchasers of investment properties will need 15% down.

Investment property refinances (all types): Current max LTV is 90% for rate and term refinances and 85% for cash-out refi’s, new max is 75% for both. This means the most you can get with an investment property refi is 75% of the value.

The changes are not in effect yet for loans that are run through Fannie Mae’s automated underwriting system, and Fannie Mae has not announced when they will upgrade their underwriting software. They usually make upgrades relatively soon after making announcements.

With the bailout of Fannie Mae and Freddie Mac, there are sure to be some changes in a variety of areas.

Stay tuned. We will have follow up information when available.