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Does Fannie Mae Do VA Loans

If you are looking to apply for a certain mortgage loan like VA, there is a high chance you have come across the name Fannie Mae. It is a governmental institution directly involved with the mortgage business. Hence, there is nothing wrong with asking – “Does Fannie Mae do VA loans?”.

The Federal National Mortgage Association (most commonly referred to as Fannie Mae) is a government agency that helps people with below-average credit scores apply for loans. However, it does not directly issue loans but rather, through secondary mortgage programs, helps individuals and companies reach a suitable agreement for both parties.

 A person filing an application

Fannie Mae Does Not Do VA Loans

While searching for a mortgage company, you have certainly come across names like Bank of America, Angel Oak, or Charles Schwab & Rocket Mortgage partnership, and these types of companies are exactly what you should be looking for when applying for a VA mortgage loan. However, Fannie Mae is a different kind of institution, and you can’t enter its offices and ask for a VA loan. However, Fannie Mae is an institution that can help you acquire the loan you desire. Here is some basic information about it:

  • Fannie Mae is a governmental institution that invests in the mortgage market and, as a result, maintains liquidity for companies. Each year, this institution issues strict mortgage values for different types of homes and purchases them from private companies like City Creek. By doing so, Fannie Mae guarantees a certain amount of income to private companies, but it also transforms the purchased mortgages into secondary loan programs, which people can use when applying for a loan at that same company.
  • Not every business can establish a partnership with Fannie Mae. In order for a company to be eligible, it needs to comply with the federal document named Statement on Subprime Lending. Hence, it can also add a lot to the reputation of a certain enterprise since many companies cannot state in their portfolio that they have an agreement with this federal institution, which automatically means that as a customer, you won’t have access to Fannie Mae benefits.
  • Once the mortgage is purchased, the money is converted into mortgage-backed securities (MBS,) which are the aforementioned secondary loan programs. These programs can then be bought by different insurance companies, banks, or even private mortgage companies like Angel Oak.
  • Of course, people need to meet certain criteria in order to apply for these secondary programs, but their ultimate goal is to help the population who have below-average earnings purchase their real estate.

What Are VA Loans?

There is no denying that mortgage services can be confusing for a person who has no prior experience. So, first of all, we would advise you to find some good mortgage books or visit the official website of the above-mentioned companies. They are bound to have useful information and resources on at least basic mortgage terminology. Nevertheless, let us see what a VA loan is:

  • A VA loan is a loan approved by the US Department of Veteran Affairs. People who are active service members, veterans, or surviving spouses have the right to apply.
  • In theory, the VA loan has no maximum amount, and credit score is not the deciding factor. Unfortunately, mortgage businesses have the right to set their private requirements, and the average needed credit score is around 620. The average maximum amount is around 640,000 dollars currently.
  • Not every military member can apply for this loan. You need to meet certain requirements – 90 days of continuous active duty, 90 days of consecutive participation in a war, 181 days of continuous duty during peacetime, or at least six years in the National Guard or Reserve.
  • VA loans don’t have a down payment, there are no minimum income requirements, and mortgage insurance is not required. However, lending companies are especially strict when it comes to these specific loans, and you will have to prove your military career.

Fannie Mae Offers Various Secondary Loan Programs

As mentioned, a person can usually, through an insurance company, apply for one of Fannie Mae’s mortgage-backed securities. If a person gets approval, even though a credit score doesn’t meet the requirements, Fannie Mae will, through one of these programs, guarantee a full repayment.

HomeReady MortgageThis plan allows families who have a low to medium overall income to purchase a property with a low downpayment. The usual requirement is that a person should have a credit score below 620.
3% DownPaymentThis is a plan that will guarantee that, during a purchase of the real estate, you won’t be asked for a down payment that exceeds 3% of the entire value. However, you need to be buying real estate for the first time and it has to be your primary residence.
HFA PreferredThe HFA Preferred program works on a state level and helps people find the most affordable housing through their local lenders. The HFA takes the responsibility of evaluating the overall financial status of the person.
RefiNowRefiNow is a special program dedicated to the population who are considered to earn a low income (at or below 80% of the median income). This program establishes a non-negotiable fixed interest rate and a reasonable repayment schedule.

When it comes to the VA loan, these programs, in most cases, won’t be applicable since VA is already a special mortgage plan that is dedicated to a specific part of the population. Nonetheless, this primarily depends on the mortgage company.

 A real estate agent holding a "sold" sign

Definitely Consider Applying for One of These Programs

According to reports, Fannie Mae accumulated over 1.4 trillion dollars in loans which were then transferred to these special programs. It is, without a doubt, one of the most helpful mortgage institutions and has helped many families achieve their real estate goals. If you meet some of the requirements, you should definitely look to apply for one.