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Home » No Down Payment » 80/20 Loans » Guidelines

80/20 Loans.

80/20 Conventional Mortgage Loan with No Down Payment Requirements.

80/20 – 30 Year Fixed Rate 1st and 2nd Mortgage

Guidelines

Calculators

80/20 No Money Down Loan Program Guidelines

Loan Purpose

Purchase only

Credit Profile

620 minimum middle credit score for all borrowers on the loan
Desktop Underwriting findings must be “Approved/Eligible” and Loan Prospector findings must be “Accept”
Non-traditional credit not permitted
Waiting period after a major negative credit event

Conventional Loan Type	BK – Chapter 7	BK – Chapter 13 Discharged	BK – Chapter 13 Dismissal	Foreclosure*	Short Sale, Deed-In-Lieu, Pre-Foreclosure*	Modified Mortgage*
Standard	4 years	2 years	4 years	7 years	4 years	2 years
With Extenuating Circumstance	2 years	2 years	5 years	3 years (requires 10% down)	2 years	No waiting period

* If a property was included AND surrendered (i.e. property wasn’t retained and the debt wasn’t reaffirmed) in a Chapter 7 Bankruptcy, the borrower may potentially be able to defer to the Chapter 7 waiting period Vs. the Foreclosure waiting period.

Income Restrictions

Borrowers’ income on the loan application is limited to household income of 80% of the AMI based on Fannie Mae Home Ready and Freddie Mac Home Possible Loan programs census tract data
Income is based on income of the borrowers on the loan application, including non-occupant co-borrowers
Income of the household is not evaluated
Lookup tools to determine income restrictions:
- Fannie Mae HomeReady: https://ami-lookup-tool.fanniemae.com/
- Freddie Mac Home Possible: https://sf.freddiemac.com/working-with-us/affordable-lending/area-median-income-and-property-eligibility-tool

Loan Amount

Loan amount not to exceed 2025 conventional loan limits of $806,500 or if the property is in a High Balance area the FHFA Conforming Loan Limits

Mortgage Insurance

No mortgage insurance required

Ratios

As determined by Automated Underwriting System. Requires a Desktop Underwriter “Approved/Eligible” and Loan Prospector findings must be “Accept” findings

Property Type

Primary residences/Owner-occupied only
1-unit properties
Fannie Mae approved condos
PUD’s (i.e. Townhomes)

Documentation

All loans must be fully documented per Agency Guidelines
For Self Employed borrowers, in addition to Agency Guidelines, two years of the tax returns (personal and business) along with a year-to-date profit and loss (unaudited)

Down Payment/Closing Costs – Purchase

Minimum Down Payment: $0
Seller contribution toward buyers closing costs and escrows 3% of the purchase price
Additional subordinate financing must meet requirements for a community second per the Fannie Mae selling guide. Maximum 105% CLTV for all Community Seconds transactions

Homebuyer Education

At least one borrower must complete the Framework on-line education program at https://educate.frameworkhomeownership.org/ or a completed training by any education course that meets National Industry Standards (NIS)
For loans that involve a Community Seconds or down payment assistance program, buyers may instead complete the homeownership education course or counseling required by the Community Seconds or down payment assistance program if it is provided by a HUD-approved agency and completed prior to program if it is provided by a HUD-approved agency and completed prior to closing
A copy of the homebuyer education certificate of completion must be provided prior to the loan closing

Terms

Amortization period: 30-year fixed rate for both the 1^st and 2^nd mortgage loans