New Fannie Mae Guidelines

Starting August first there will be new guidelines for conversion of a primary residence to an Investment Property. This change will significantly impact the investing market as well as homeowners that need to relocate.

Under the new guidelines – while Fannie Mae will continue to permit up to 75% of rental income to offset the mortgage payment, owners will now have to have 30% equity in the existing property. Equity will be derived from an appraisal, AVM, or BPO less any outstanding liens. Rental income will need to be fully documented with an executed lease agreement & a deposit confirmation.

If the 30% equity in the property cannot be documented, then the rental income can not be used to offset the mortgage payment. Therefore, the borrow will need to have a high enough income to qualify for both homes. In addition the borrower will have to have 6 months of reserves for both properties.

You can read more of the specifcs about these changes at  – https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0816.pdf

All of this will have a significant impact of the investing community. It has already gotten more challenging with the removal of stated income loans – but this will have far reaching effects not only for investors, but for Middle America. As the home sales continue to lag- people that need to move for a job, or to be closer to a family member now will not be able to purchase a new home until their other home sells. This may end up crippling to our economy.

As a real estate professional. it is our duty to understand and advise our clients about options that are available to them. In the past putting a property in rental services was a viable option – now it is more limiting than just selling the property.

We encourage you to read through the new guidelines to become more educated.

2 Responses to “New Fannie Mae Guidelines”

1. Sale Says:
   July 26th, 2008 at 9:25 am

   You can contact local real estate brokerages to find agents who market and sell Fannie Mae properties.

2. myrtle beach condos Says:
   January 4th, 2009 at 12:57 am

   a lot of the people trying to sell need to take a serious look a being a landlord for a little while. its better than foreclosure

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