Program Guidelines

The minimum credit score for a conventional loan is 620 for fixed-rate and adjustable-rate mortgages. Higher credit scores may be required for certain transaction types such as cash-out refinances or investment properties. Borrowers with scores between 620 and 680 may face additional pricing adjustments through loan-level price adjustments (LLPAs).

For a 1-unit primary residence purchase, the maximum LTV is 97% with eligible mortgage insurance. For 2-unit properties the maximum LTV is 85%, for 3-4 unit properties it is 75%. Manufactured housing is limited to 95% LTV. Higher LTV transactions require private mortgage insurance (PMI).

The standard maximum DTI ratio for conventional loans is 45% when approved through Desktop Underwriter (DU). In some cases, DU may approve DTI ratios up to 50% based on strong compensating factors such as significant reserves, excellent credit history, or low LTV. Manual underwriting typically caps DTI at 36% or 45% with compensating factors.

The 2025 baseline conforming loan limit for a 1-unit property is $806,500 in most areas. In designated high-cost areas, the limit can go up to $1,209,750 for 1-unit properties. Limits increase for 2-4 unit properties proportionally. These limits are set annually by the Federal Housing Finance Agency (FHFA) based on home price changes.

Private mortgage insurance (PMI) is required on conventional loans with an LTV exceeding 80%. PMI can be borrower-paid (monthly or single premium) or lender-paid through a higher interest rate. PMI can be cancelled once the LTV reaches 80% based on the original value, and automatically terminates at 78% LTV based on the original amortization schedule.

Eligible property types include single-family residences, PUDs, condominiums (warrantable), co-ops, and 2-4 unit properties. Manufactured housing is eligible if it meets specific requirements including a permanent foundation and minimum width/size standards. Condotels and non-warrantable condominiums are generally ineligible for standard conventional financing.

Gift funds are allowed for the down payment, closing costs, and reserves on primary residence and second home purchases. For LTV ratios above 80% on 1-unit primary residences, the borrower must contribute at least 5% of the purchase price from their own funds unless the LTV is 80% or less. Gift donors must be related to the borrower by blood, marriage, adoption, or legal guardianship, or be a domestic partner or fiancé.

For investment property purchases, Fannie Mae requires 6 months of PITIA reserves. If the borrower owns multiple financed properties, additional reserves of 2% of the aggregate unpaid principal balance of all other financed properties may be required. Reserves can come from liquid assets including checking, savings, stocks, bonds, and retirement accounts (60% of vested balance).

For a 1-unit primary residence, the maximum LTV for a cash-out refinance is 80%. For 2-4 unit primary residences, the limit is 75%. Second homes are limited to 75% LTV, and investment properties are capped at 75% LTV for 1-unit and 70% for 2-4 units. A 12-month seasoning requirement applies from the date the existing mortgage was originated.

Verbal verification of employment (VVOE) is required within 10 business days prior to the note date for all borrowers. Written verification must confirm at least 2 years of employment history. Pay stubs covering the most recent 30-day period and W-2s for the most recent 2 years are standard documentation requirements.

Self-employed borrowers must provide 2 years of signed personal and business federal tax returns (all schedules), year-to-date profit and loss statement, and business license or CPA letter confirming business existence. If the business shows a decline in income of 20% or more, additional analysis and documentation are required. The borrower must have at least a 25% ownership interest to be considered self-employed.

For Chapter 7 bankruptcy, a 4-year waiting period is required from the discharge or dismissal date. For Chapter 13 bankruptcy, a 2-year waiting period from the discharge date or 4 years from the dismissal date applies. Extenuating circumstances may reduce the Chapter 7 waiting period to 2 years with documented evidence and a minimum 10% down payment.

The standard waiting period after a foreclosure is 7 years from the completion date of the foreclosure action. With documented extenuating circumstances, the waiting period may be reduced to 3 years with a maximum 90% LTV. A deed-in-lieu of foreclosure or short sale has a 4-year waiting period, reducible to 2 years with extenuating circumstances.

Second homes must be occupied by the borrower for some portion of the year and must be suitable for year-round use. The property must be a 1-unit dwelling and cannot be subject to any rental pool or timeshare arrangement. The borrower must have exclusive control over the property, and it must be located a reasonable distance from the primary residence.

Yes, temporary buydowns (3-2-1 and 2-1) are permitted on fixed-rate purchase transactions for primary residences and second homes. The borrower must qualify at the full note rate, not the bought-down rate. Buydown funds must be deposited into an escrow account at closing and are typically provided by the seller, builder, or other interested party.

Fannie Mae offers appraisal waivers through Desktop Underwriter (DU) when the property and transaction meet specific criteria. Value acceptance (formerly PIW) may be offered on purchase and refinance transactions with lower LTV ratios. Properties must have adequate comparable sales data in the Collateral Underwriter (CU) database. Investment properties and manufactured homes are generally not eligible for appraisal waivers.

Subordinate financing is permitted as long as the combined loan-to-value (CLTV) does not exceed the applicable limits, typically 95% for 1-unit primary residences. Community seconds and other affordable housing subordinate liens may allow CLTVs up to 105% under specific programs. All subordinate financing must have regular payments; negative amortization is not permitted on the subordinate lien.

Non-occupant co-borrowers are permitted on 1-unit primary residence transactions. The maximum LTV with a non-occupant co-borrower is 95% for purchase transactions. The non-occupant co-borrower must be a relative (parent, grandparent, child, spouse, domestic partner, or sibling) to qualify for standard LTV limits. Non-relatives are limited to 75% LTV.

Conventional fixed-rate loans originated after 1988 are generally not assumable; they contain a due-on-sale clause that requires full repayment upon transfer. Adjustable-rate mortgages (ARMs) may be assumable after the initial fixed-rate period with lender approval, subject to creditworthiness review of the assuming borrower. The due-on-sale clause may be enforced at the lender/servicer discretion.

Fannie Mae allows borrowers to have up to 10 financed residential properties, including their primary residence. Borrowers with 7-10 financed properties face additional requirements including a minimum 720 credit score, 25% down payment for purchases, and 6 months reserves on each financed property. DU may impose additional restrictions based on risk assessment.

Rate-and-term refinances allow the borrower to pay off the existing mortgage, closing costs, prepaids, and points without receiving cash back exceeding $2,000 or 2% of the new loan amount, whichever is less. The maximum LTV is 97% for 1-unit primary residences. No seasoning requirement applies for rate-and-term refinances, though the existing loan must be current.

Standard income documentation includes the most recent 30 days of pay stubs, W-2s for the past 2 years, and federal tax returns for 2 years if self-employed or commission income exceeds 25%. Additional income sources such as rental income, alimony, child support, and Social Security require specific documentation to verify receipt and likely continuance for at least 3 years.

No, Fannie Mae does not permit prepayment penalties on any conventional conforming loans. Borrowers may pay off their mortgage in full or make additional principal payments at any time without incurring a penalty. This has been a standard requirement under the Qualified Mortgage (QM) rule and Fannie Mae guidelines.

Condominiums must be warrantable, meaning the HOA must have adequate insurance, no more than 15% of units can be delinquent on dues, no single entity can own more than 20% of units in a project over 20 units, and at least 50% of units must be owner-occupied for established projects. The project must not be subject to litigation that could affect safety or habitability.

Manufactured homes must be at least 12 feet wide and 600 square feet in living area, built after June 15, 1976, and bear a HUD certification label. The home must be classified as real property and permanently affixed to a foundation meeting Fannie Mae standards. Maximum LTV is 95% for a primary residence purchase. MH Advantage properties may qualify for terms comparable to site-built housing.

FHA requires a minimum credit score of 580 for the maximum 96.5% LTV (3.5% down payment). Borrowers with credit scores between 500 and 579 are limited to a maximum 90% LTV (10% down payment). Most FHA-approved lenders impose overlays requiring a minimum 580-620 credit score. Borrowers with no credit score may be eligible using non-traditional credit references.

The FHA upfront mortgage insurance premium (UFMIP) is 1.75% of the base loan amount, which can be financed into the loan. Annual MIP rates vary based on LTV, loan term, and loan amount; for loans over 15 years with LTV above 95%, the annual MIP rate is 0.55% of the outstanding balance. MIP is required for the life of the loan when the initial LTV exceeds 90%.

FHA allows a maximum DTI ratio of 43% for manually underwritten loans without compensating factors. With compensating factors, the DTI can go up to 50% on manually underwritten loans. Loans approved through the TOTAL Mortgage Scorecard (AUS) may be approved with DTI ratios up to 57% depending on the overall risk profile and credit score.

The FHA floor for 1-unit properties in 2025 is $524,225 in standard-cost areas. The ceiling in high-cost areas is $1,209,750 for 1-unit properties. Limits increase for 2-4 unit properties. FHA loan limits are set at 65% of the conforming loan limit for the floor and 150% for the ceiling, and vary by county.

FHA requires a minimum 3.5% down payment for borrowers with credit scores of 580 or higher. Borrowers with credit scores between 500-579 must make at least a 10% down payment. The down payment can come from the borrower's own funds, gifts from family members, employer assistance programs, or government grants. Seller concessions are limited to 6% of the sales price.

FHA-eligible property types include 1-4 unit single-family residences, HUD-approved condominiums, and manufactured homes on permanent foundations. Mixed-use properties are eligible if the residential portion is at least 51% of the total floor area. Properties must meet FHA Minimum Property Requirements (MPR) and Minimum Property Standards (MPS) for safety, security, and soundness.

FHA allows 100% of the down payment to come from gift funds for borrowers with credit scores of 580 or above. Gift donors must be family members, employers, labor unions, charitable organizations, or government agencies. A gift letter is required stating the amount, the donor's relationship to the borrower, and that no repayment is expected. Documentation of the transfer of funds is required.

FHA requires a full interior/exterior appraisal by an FHA-approved appraiser for all purchase transactions. The appraisal must verify that the property meets FHA Minimum Property Requirements (MPR) including adequate roofing, functioning utilities, and safe water/sewage systems. FHA appraisals are valid for 180 days with a possible 30-day extension. The appraisal is assigned a case number and stays with the property.

For Chapter 7 bankruptcy, FHA requires a 2-year waiting period from the discharge date. For Chapter 13 bankruptcy, borrowers may be eligible after 12 months of the payout period with satisfactory payment performance and court approval. Extenuating circumstances may further reduce waiting periods. The borrower must demonstrate re-established credit or chosen not to incur new credit.

FHA requires a 3-year waiting period from the date of the foreclosure sale or the date the borrower transferred ownership via deed-in-lieu or short sale. Extenuating circumstances such as serious illness or job loss may allow eligibility sooner with a minimum 1-year waiting period and evidence of credit recovery. The borrower must have re-established satisfactory credit.

FHA Streamline Refinances require a minimum of 210 days from the first payment date and at least 6 payments made on the existing FHA loan. A net tangible benefit (NTB) must be demonstrated, typically a reduction in the monthly payment of at least 5% or a change from an ARM to a fixed rate. No appraisal is required for a non-credit-qualifying streamline refinance.

FHA requires verification of the borrower's employment for the most recent 2 years. A verbal verification of employment (VVOE) must be obtained within 10 calendar days prior to the note date. Pay stubs covering the most recent 30 days, W-2s for the past 2 years, and employer contact information are standard documentation. Gaps in employment exceeding 6 months require a letter of explanation.

Self-employed borrowers must provide 2 years of signed personal and business federal tax returns with all schedules. A year-to-date profit and loss statement or audited financial statement may be required. The business must have existed for at least 2 years; borrowers with 1-2 years of self-employment may be eligible with prior related employment experience. Business verification through a third party is required.

Yes, FHA permits non-occupant co-borrowers on 1-4 unit primary residence purchases. A non-occupant co-borrower who is a family member allows the maximum LTV of 96.5%. Non-family non-occupant co-borrowers reduce the maximum LTV to 75%. The non-occupant co-borrower must sign the mortgage note and is fully obligated on the debt.

FHA cash-out refinances allow a maximum LTV of 80% and require the borrower to have owned and occupied the property as their primary residence for the prior 12 months. A full appraisal is required. The minimum credit score is typically 500, though most lenders require 580-620. All existing liens, including HELOCs, must be paid off or subordinated.

Yes, FHA permits temporary interest rate buydowns (2-1 and 1-0) on fixed-rate purchase transactions for primary residences. The borrower must qualify at the note rate, not the bought-down rate. Buydown funds must be placed in escrow and can be contributed by the seller, builder, or other interested party within the 6% seller concession limit.

FHA does not typically require reserves for 1-2 unit primary residence purchases. For 3-4 unit properties, the borrower must have 3 months of PITI in reserves after closing. Reserves can include liquid assets such as savings, checking, stocks, bonds, and retirement accounts. Gift funds may not be used to satisfy reserve requirements.

Yes, FHA loans are assumable with lender approval and a creditworthiness review of the assuming borrower. The new borrower must meet current FHA eligibility requirements including credit score, DTI, and income verification. For loans originated after December 15, 1989, HUD/FHA approval of the assumption is required. The original MIP terms carry forward to the new borrower.

FHA prohibits financing properties resold within 90 days of the seller's acquisition (anti-flipping rule). For properties resold between 91-180 days with a price increase exceeding 100%, a second appraisal is required at no cost to the borrower. Exceptions exist for HUD REO properties, properties sold by government agencies, and properties in designated disaster areas.

FHA limits interested party contributions (seller concessions) to 6% of the sales price or appraised value, whichever is less. These contributions can be used to pay closing costs, prepaid items, discount points, and buydown funds. They cannot be used for the borrower's minimum required investment (down payment). Excess contributions reduce the sales price for LTV calculation purposes.

FHA accepts a wide range of income sources including employment wages, self-employment, Social Security, retirement, disability, alimony, child support, VA benefits, rental income, and non-taxable income (which can be grossed up by 25%). Each income type has specific documentation and continuance requirements. Income must be verified as stable and likely to continue for at least 3 years.

Condominiums must be on the FHA-approved condo list or qualify under the Single-Unit Approval (SUA) process. For SUA, the project must have at least 50% owner-occupancy, no more than 50% FHA concentration, adequate insurance, and be free of significant litigation. The individual unit must meet FHA minimum property requirements. Projects with more than 35% commercial space are ineligible.

For student loans in deferment, forbearance, or income-based repayment, FHA requires the lender to use the greater of 1% of the outstanding loan balance or the actual documented payment amount when calculating DTI. If the actual payment is $0 due to an income-driven plan, the lender must use 0.5% of the outstanding balance. This ensures student debt is properly accounted for in qualification.

FHA permits subordinate financing from government agencies, instrumentalities, and approved nonprofit organizations. The maximum CLTV is 100% when the subordinate financing comes from a government entity or HUD-approved nonprofit. No secondary financing from private individuals is allowed in combination with the minimum borrower investment. All subordinate liens must be disclosed and documented.

For FHA loans originated after June 3, 2013 with an initial LTV above 90%, MIP is required for the life of the loan and cannot be cancelled. For loans with an initial LTV of 90% or less, MIP can be removed after 11 years of payments. Borrowers seeking to eliminate MIP on high-LTV loans must refinance into a conventional loan once they have sufficient equity (typically 20%).

The VA does not set a minimum credit score requirement. However, most VA-approved lenders impose overlays requiring a minimum credit score of 580-620. The VA relies on a residual income analysis and overall credit profile rather than a strict credit score cutoff. Borrowers with lower credit scores may still qualify if they demonstrate satisfactory credit history and adequate residual income.

The VA funding fee is a one-time charge ranging from 1.25% to 3.3% of the loan amount, depending on service type, down payment amount, and whether it is first-time or subsequent use. For first-time use with no down payment, the fee is 2.15% for regular military. The fee can be financed into the loan amount. Veterans receiving VA disability compensation are exempt from the funding fee.

VA entitlement is the amount the VA guarantees on a home loan, effectively serving as the veteran's "down payment equivalent." Full entitlement means the veteran has never used their benefit or has fully restored it. The basic entitlement is $36,000, with an additional bonus entitlement for loans exceeding $144,000. Veterans with full entitlement have no loan limit as of January 1, 2020.

The Certificate of Eligibility (COE) confirms a veteran's eligibility for VA home loan benefits, including available entitlement, prior VA loan usage, and funding fee exemption status. Lenders can obtain a COE automatically through WebLGY or the veteran can request one through eBenefits. Required documentation includes DD-214 for veterans, statement of service for active duty, or NGB-22 for National Guard members.

VA requires that borrowers have sufficient residual income after paying all monthly obligations including the proposed mortgage payment, taxes, insurance, and maintenance. Residual income thresholds vary by geographic region, family size, and loan amount. For a family of 4 in the West with a loan over $80,000, the minimum residual income is $1,117 per month. Residual income exceeding the guideline by 20% or more is a significant compensating factor.

The VA does not set a hard maximum DTI ratio but uses 41% as a benchmark for manual underwriting. Loans exceeding 41% DTI require compensating factors such as excellent credit, tax-free income, low residual income ratio, or minimal discretionary debt. Loans approved through the VA AUS (TRONC) may be approved at higher DTI ratios based on the overall risk assessment.

VA loans offer 100% financing with no down payment required for eligible veterans with full entitlement. Veterans with reduced entitlement may need a down payment to cover the gap between the VA guarantee and the loan amount. A 5% down payment reduces the funding fee to 1.5% for first-time use, and a 10% down payment reduces it to 1.25%.

VA-eligible properties include 1-4 unit residences, VA-approved condominiums, and manufactured homes on permanent foundations. The property must be the veteran's primary residence. Second homes and investment properties are not eligible for VA financing. Mixed-use properties may be eligible if primarily residential. Farms are eligible if there is a residence on the property.

VA requires an appraisal by a VA-assigned fee panel appraiser through the Appraisal Management System. The appraisal establishes the Notice of Value (NOV) and checks Minimum Property Requirements (MPRs) for safety, structural soundness, and sanitation. The appraisal is valid for 180 days with a possible 180-day extension. If the appraised value is below the contract price, the veteran can renegotiate, appeal through a Reconsideration of Value (ROV), or pay the difference.

VA requires a 2-year waiting period from the discharge date for Chapter 7 bankruptcy. For Chapter 13 bankruptcy, the borrower may be eligible after 12 months of satisfactory plan payments with court approval. After a VA foreclosure, there is a 2-year waiting period from the date of the foreclosure. The veteran must also have their entitlement restored if used on the foreclosed property.

The VA IRRRL (streamline refinance) requires the borrower to currently have a VA loan on the property. A minimum of 210 days must have elapsed since the first payment, and at least 6 payments must have been made. A net tangible benefit must be demonstrated, typically a 0.5% reduction in the interest rate. No appraisal, credit underwriting, or income documentation is required for most IRRRLs.

Yes, VA loans are fully assumable with lender approval and VA approval of the assuming borrower. Both veterans and non-veterans can assume a VA loan. If a non-veteran assumes the loan, the original veteran's entitlement remains tied to the property until the loan is paid in full. The assuming borrower must meet current qualification standards and pay a 0.5% funding fee.

VA cash-out refinances allow veterans to borrow up to 100% of the appraised value of the property. The property must be the veteran's primary residence. A full appraisal is required, and the borrower must meet standard VA credit and income qualification criteria. The loan must season for at least 210 days from the first payment of the existing loan, regardless of the loan type being refinanced.

Veterans receiving VA disability compensation (or who would be receiving it but for active duty pay) are exempt from the funding fee. Surviving spouses of veterans who died in service or from a service-connected disability are also exempt. Purple Heart recipients serving on active duty are exempt. The COE will indicate funding fee exemption status.

VA loans require the veteran to certify intent to occupy the property as their primary residence within 60 days of loan closing. Active-duty service members may have a spouse satisfy occupancy if deployed. In some cases, the occupancy deadline may be extended to 12 months for properties under construction or renovation. The VA does not allow VA loans for second homes or investment properties.

No, VA loans do not have prepayment penalties. Borrowers may pay off the loan in full or make additional principal payments at any time without penalty. This applies to all VA loan types including purchase, cash-out refinance, and IRRRL. The absence of prepayment penalties allows veterans to refinance or sell without additional costs.

VA requires verification of employment for the most recent 2 years. A verbal verification of employment is required within 10 business days of the note date. Pay stubs for the most recent 30 days and W-2s for the past 2 years are standard requirements. Military personnel must provide a Leave and Earnings Statement (LES). Gaps in employment must be explained and documented.

VA accepts a wide range of income sources including base military pay, BAH, BAS, flight pay, hazardous duty pay, employment wages, self-employment income, Social Security, disability benefits, retirement, alimony, and child support. Non-taxable income can be grossed up by 25%. All income must be stable, reliable, and expected to continue. VA also considers residual income in conjunction with DTI analysis.

VA allows gift funds for closing costs and to reduce the loan amount but does not require a down payment for fully entitled borrowers. Gifts can come from family members, other relatives, or entities with a verifiable interest in the veteran's welfare. A gift letter must document the donor, amount, and that no repayment is required. The donor's ability to make the gift must be verified.

VA allows joint loans with non-veteran co-borrowers who occupy the property (such as a spouse). When a non-veteran co-borrower is on the loan, the VA guaranty is based only on the veteran's portion of the loan, which may require a down payment on the non-veteran's share. If the co-borrower is a veteran spouse with their own entitlement, both entitlements can be combined for full guaranty.

The maximum CLTV for a HELOC is typically 80-90% depending on the lender, property type, and credit profile. For primary residences with strong credit (720+), CLTVs up to 90% may be available. Second homes are generally limited to 80% CLTV, and investment properties to 70-75% CLTV. The first mortgage balance plus the HELOC credit limit must not exceed the maximum CLTV.

The standard HELOC draw period is 10 years, during which the borrower can access funds up to their approved credit limit and make interest-only payments. After the draw period ends, the loan enters the repayment period, typically 20 years, where the borrower repays both principal and interest. Some HELOCs offer a 5-year draw period with a 15-year repayment period.

Most HELOC lenders require a minimum credit score of 680, though some may go as low as 620 with a lower CLTV and higher interest rate. Borrowers with credit scores of 740 or above typically receive the best rates and highest credit limits. Credit score tiers directly impact both the available CLTV and the margin applied to the variable interest rate.

HELOCs typically carry a variable interest rate tied to the Prime Rate plus a margin determined by the borrower's creditworthiness, CLTV, and property type. For example, a well-qualified borrower might receive Prime + 0.50%. Most HELOCs have rate floors (minimum rate) and caps (maximum rate, often 18-21%). Some lenders offer fixed-rate conversion options for portions of the drawn balance.

Eligible property types for HELOCs include single-family residences, condominiums, townhomes, and PUDs used as primary residences. Some lenders extend HELOCs to second homes and investment properties, though with lower CLTVs and higher rates. Manufactured homes, co-ops, and mixed-use properties are generally ineligible. The property must have a clear and marketable title.

Most HELOC lenders require a maximum DTI ratio of 43-50%, calculated using the fully-drawn HELOC payment at the fully-indexed rate. Some lenders use only the interest-only payment on the current balance for qualification, while others use the full credit limit payment. The DTI calculation includes the first mortgage PITI plus all recurring monthly obligations.

HELOC documentation requirements include income verification (pay stubs, W-2s, tax returns for self-employed), asset statements, property insurance declarations page, current mortgage statement, and government-issued identification. An appraisal or automated valuation model (AVM) may be used to determine property value. Some lenders offer streamlined documentation for existing customers.

Yes, lenders may freeze or reduce a HELOC credit line under certain conditions, including a significant decline in property value, a material change in the borrower's financial condition, or fraud. If the home value drops below the credit limit, the lender can reduce the line to the current equity. Borrowers must be notified in writing, and the freeze does not affect the existing drawn balance.

HELOC closing costs vary by lender but may include an appraisal fee ($300-500), title search, recording fees, and annual fees. Many lenders offer HELOCs with no closing costs or waive them if the line remains open for a minimum period (typically 24-36 months). If the HELOC is closed within the early termination period, the borrower may be required to repay waived fees.

Most HELOC lenders require the borrower to have owned the property for at least 6-12 months before opening a HELOC. If the property was recently purchased, the lender may use the lower of the purchase price or current appraised value. Some lenders allow day-one HELOCs with specific conditions such as a maximum CLTV of 80% and a minimum credit score of 720.

When refinancing the first mortgage, the HELOC holder must either subordinate their lien to the new first mortgage or the HELOC must be paid off. A subordination agreement allows the HELOC to remain in place behind the new first mortgage. The HELOC lender will review the new loan terms and CLTV before agreeing to subordinate. Processing a subordination typically takes 2-4 weeks.

Minimum HELOC line amounts typically range from $10,000 to $25,000 depending on the lender. Maximum line amounts can reach $500,000 to $1,000,000 or more for high-value properties, subject to CLTV limits and borrower qualification. Some lenders offer jumbo HELOCs exceeding $1 million for properties in high-value markets with strong borrower profiles.

In delegated correspondent lending, the correspondent lender underwrites and closes the loan in their own name with authority to make final credit decisions. In non-delegated lending, the correspondent submits the loan file to the investor for underwriting approval before closing. Delegated correspondents assume more risk and must meet stricter approval requirements, while non-delegated correspondents rely on the investor's underwriting expertise.

Correspondent credit score requirements follow the underlying agency guidelines (620 for conventional, 580 for FHA/VA) plus any investor overlays. Some correspondents impose higher minimums such as 640 for conventional or 620 for FHA. Non-delegated channels may have slightly different credit score requirements than delegated channels. Credit scores below the investor overlay minimum are ineligible regardless of AUS approval.

Correspondent channels typically offer conventional conforming (fixed and ARM), FHA, VA, USDA, jumbo, and renovation loan products. Non-delegated channels may have a more limited product menu excluding certain higher-risk products. Product availability varies by investor and may include specialty products such as HomeReady, Home Possible, FHA 203(k), and VA renovation loans.

Correspondent lenders must lock the interest rate with the investor before or at closing and deliver the closed loan package within 15-45 days depending on the investor agreement. Late deliveries may result in pair-off fees or price adjustments. Best efforts and mandatory delivery options are available, with mandatory delivery offering better pricing but requiring delivery of the locked loan.

Correspondent sellers must maintain a quality control program that includes pre-funding review of a sample of loans, post-closing audits of at least 10% of closed loans, and early payment default monitoring. Defect rates exceeding investor thresholds may result in additional overlays, suspension, or termination of the correspondent relationship. Regulatory compliance review is a mandatory component.

Correspondent sellers represent that each loan sold was originated in compliance with all applicable laws, meets investor guidelines, and contains accurate and complete documentation. They warrant the enforceability of the mortgage, the accuracy of the appraisal, and the absence of fraud. Sellers may be required to repurchase loans that breach these representations, typically within a 12-36 month period.

Non-delegated correspondent conventional loans generally follow standard Fannie Mae/Freddie Mac LTV guidelines: up to 97% for 1-unit primary residences, 85% for 2-unit, and 75% for 3-4 unit properties. Some investors impose additional LTV restrictions on non-delegated loans, such as capping LTV at 95% for certain property types or transaction types. Cash-out refinances are typically limited to 80% LTV.

Correspondent loans must meet the underlying agency appraisal requirements. For non-delegated loans, the investor may require appraisal review or a second appraisal for high-value properties or properties in declining markets. Appraisal independence requirements must be maintained, and appraisals must be ordered through an AMC or the lender's approved panel. Desktop appraisals and appraisal waivers are subject to investor acceptance.

Non-delegated correspondent FHA loans generally follow HUD DTI guidelines with a maximum of 43% for manual underwriting and up to 57% with AUS approval. Some investors impose overlays capping DTI at 50% or 55% even with AUS approval. Compensating factors such as verified reserves, minimal payment shock, and excellent credit may be required for DTI ratios exceeding 45%.

After closing, the correspondent submits the complete loan package to the investor for purchase review. The investor reviews the file for compliance with guidelines, applicable overlays, and documentation completeness. If conditions are identified, the correspondent must clear them before the loan is purchased. Once purchased, the investor takes ownership of the loan and the correspondent receives the net proceeds based on the locked price.

Figure offers home equity lines of credit (HELOCs) with a fully digital application and funding process. Their primary product is a fixed-rate HELOC that combines the benefits of a traditional HELOC draw feature with a fixed interest rate. Figure also offers mortgage refinance products and personal loans. All products feature an online application with potential funding in as few as 5 business days.

Figure requires a minimum credit score of 640 for their HELOC product. Higher credit scores qualify for better interest rates and higher credit limits. The credit score tiers typically break at 640, 680, 720, and 760, with each tier receiving progressively better pricing. Borrowers must also demonstrate sufficient equity in their property and adequate income to support the line.

Figure typically allows a maximum CLTV of 85% for primary residences, though some states and property types may have lower limits. The maximum CLTV is calculated using the first mortgage balance plus the requested Figure HELOC amount divided by the property value. Higher credit scores and lower DTI ratios may allow access to the maximum CLTV. Second homes and investment properties have lower CLTV limits.

Figure HELOCs offer a 5-year draw period during which borrowers can access additional funds through redraws (subject to qualification). The total loan term is typically 15 or 30 years depending on the state and product. Unlike traditional HELOCs, Figure HELOCs require principal and interest payments from the start, not interest-only payments during the draw period.

Figure offers a fully online application that can be completed in minutes. After application, an automated appraisal (AVM) is used to determine property value, and income verification is conducted electronically. Approved borrowers can receive an initial draw in as few as 5 business days. Figure uses blockchain technology for loan origination and tracking, which streamlines the process and reduces costs.

Figure HELOC line amounts typically range from $15,000 to $400,000, depending on the borrower's equity, creditworthiness, and state regulations. The initial draw at closing must be at least $15,000. Subsequent redraws during the draw period are subject to a minimum amount, typically $25,000, and require re-qualification including a credit pull and income review.

Figure accepts single-family residences, condominiums, townhomes, and planned unit developments (PUDs) as eligible property types. The property must be the borrower's primary residence in most cases, though some states allow second homes. Manufactured homes, co-ops, commercial properties, and properties held in irrevocable trusts are generally ineligible. The property must have a valid title and adequate homeowners insurance.

Figure typically requires a maximum DTI ratio of 43-50%, depending on the borrower's credit profile and other risk factors. The DTI calculation includes the proposed HELOC payment (principal and interest based on the initial draw amount), the first mortgage PITI, and all other recurring monthly debts. Borrowers with higher credit scores may qualify with slightly higher DTI ratios. Self-employed borrowers must provide 2 years of tax returns for income verification.