What is the FNMA Fully Amortizing Fixed Rate and High Balance Loan?
The fully amortizing fixed rate loan provides a popular option for first-time homebuyers and repeat buyers alike, because of the fixed monthly payments and 30 year term. With a fixed interest rate, the mortgage payment won’t increase due to a change in the market. Because a shorter term mortgage isn’t always an affordable option for borrowers, a 30-year mortgage is attractive to many consumers.
The FNMA High Balance loan program offers the same fixed rate benefits but provides for higher loan limits for properties in specific high-cost areas. High-balance loans are considered to be between $424,000 and $636,150. The amount is determined based on where the property is located.
FNMA Fully Amortizing Fixed Rate and High Balance Loan Basics
- Purchase and Refinance Options
- 620 minimum qualifying credit score
- 10, 15, 20, 25, 30 year terms for fully amortizing fixed rate program
- 15 and 30 year fixed rate for high balance program
- Standard Appraisal requirements apply
- One to Four Unit primary homes
- One Unit second homes
- One to Four Unit non-owner occupied residences
- FNMA Approved Condos/PUDs
- Multi-width manufactured housing (Investment properties are not permitted)
What are the benefits?
Low Monthly Payments
Fannie Mae offers competitive interest rates which help keep payments low. The 30-year term makes budgeting easier.
Fully amortizing fixed rate loans means the fixed rate never changes, and neither does the principal and interest payment. Many homeowners prefer a fixed interest rate because it provides a sense of stability and security; in contrast to adjustable rate loans with introductory interest rates that can move higher once the introductory period is over.
Increased Loan Limits for Higher Cost Areas
Fannie Mae sets higher loan limits in specific high-cost areas, as a reflection of the average home prices there. This means more homeowners can take advantage of this program and avoid jumbo financing, which is often more costly.
Who is eligible for a Fannie Mae Fully Amortizing Fixed Rate and High Balance Loan?
Borrowers will need to meet the employment, credit, income, asset, and property requirements of FNMA loans. Other eligibility requirements include:
Minimum qualifying credit score of 620. A minimum qualifying credit score of 680 is required if utilizing Lender Purchased Mortgage Insurance (LPMI).
Eligible property types: One to Four Unit primary homes, One Unit second homes, One to Four Unit non-owner occupied residences, FNMA Approved Condos/PUDs, and Multi-width manufactured housing. Manufactured housing is not permitted as an investment property. Single wide manufactured housing and Co-ops are not permitted.
In which scenarios is the FNMA Fully Amortizing Fixed Rate and High Balance Useful?
A widely used and versatile program, the FNMA Fully Amortizing Fixed Rate High Balance mortgage can be a great fit for many purchase and refinance transactions. When not limited by specific restrictions such as not having any funds available for a down payment, or having poor credit, this can be an excellent choice offering low mortgage rates.
This product can be used by first time or move up home buyers, and buyers of a second homes or investment properties. Current homeowners interested in refinancing have both rate and term and cash out options.
Buying a Home with a FNMA Fully Amortizing Fixed Rate and High Balance Loan
Borrowers should know their goals before deciding on a term length for a Fully Amortizing Fixed Rate or High Balance loan. 30 year terms are feasible to many because the monthly payments will be lower, but extending a mortgage means it will take longer to build equity through repayment. It is always possible that additional equity will be gained through an increase in property value.
FNMA Fully Amortizing Fixed Rate and High Balance Loan Refinancing
The FNMA Fully Amortizing Fixed Rate and High Balance Loan is an ideal loan solution for home buyers, but it’s also an exceptional product for existing homeowners who want to refinance. Whether borrowers are looking for a shorter term mortgage to save money and interest and pay off the loan sooner, or want to consolidate debt or have funds available for other expenses through a cash out, this program can be a great fit.
Other Programs to Consider:
If the FNMA Fully Amortizing Fixed Rate & High Balance Loan is not an ideal fit for a particular scenario here are a few other products to explore:
- Low down payment, 30 year fixed option: FHA 203(b)
- 100% financing for eligible members of the US military and veterans: VA Loan
- No money down mortgage for low to moderate income borrowers in rural areas: USDA Mortgage