Here are some guideline differences between Fannie and Freddie and a few of the differences between the two.

ALIMONY PAYMENTS

  • FANNIE – You may count the alimony payment as a monthly debt OR deduct from the income.
  • FREDDIE – You must reduce the income by the amount of the alimony.

APPRAISAL WAIVERS

FANNIE allows on investment refinances. FREDDIE does not.

CASH-OUT REFINANCES

  • FANNIE – If Debt to Income Ratios exceeds 45%. 6 months reserves required.
  • FREDDIE – No Debt to Income Ratios limit. Freddie Mac decides reserve requirements.

CASH-OUT ON RATE AND TERMS

  • FANNIE – Lesser of 2% of loan amount or $2,000.
  • FREDDIE – Greater of 1% of loan amount or $2,000.

COLLECTIONS

  • FANNIE – 2-4 units or 2nd homes. Collections exceeding $5,000 must be paid off. Investment properties that exceed $250 for one account or $1,000 aggregate must be paid off.
  • FREDDIE – Included in the assessment within LP. No specific guides.

MAX Debt to Income Ratios the automated underwriting system will approve

  • FANNIE – 50.00
  • FREDDIE – 50.49

MORTGAGE NOT REPORTING ON BUREAU

  • FANNIE – Must get payment history.
  • FREDDIE – Ok with no history if ACCEPT.

RESERVES FOR MULTIPLE OWNED PROPERTIES

  • FANNIE – Reserves based on % of unpaid balances.
  • FREDDIE – Reserves based on # months of PITIA.

SELF-EMPLOYED # OF YEARS REQUIRED

  • FANNIE – Is possible to have one year on the automated underwriting system.
  • FREDDIE – Must be self employed 5 years to use one year return.

STUDENT LOANS

  • FANNIE – When no payment exists can use 1% of balance.
  • FREDDIE – When no payment exists can use .5% of balance.
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