How to Find a Fannie Mae-Approved Lender

If you want a Fannie Mae-backed home loan, you need to get your loan through an approved lender. Fannie Mae, a government-sponsored enterprise (GSE), only accepts conforming loans that meet strict monetary standards, such as minimum credit scores. These standards are in place to protect the financial stability of the loan financing program. Luckily, numerous financial institutions and lenders offer conforming loans that meet the company’s precise specifications. However, it can be a challenge to identify the best lenders for your home loan. Although Fannie Mae offers lists of vendors, understanding what service they provide is complicated. Additionally, such lists are not exhaustive and do not tell you about products or fees.

Navigating the world of financial institutions to find the best Fannie Mae lender for you can be overwhelming. You may see many different terms thrown around, like mortgage banker, direct lender and mortgage broker. You may wonder what the difference is between conventional loans and conforming loans. A conventional loan is not government-backed, while a conforming loan meets the requirements for Fannie Mae home loans or other loans. A loan can be both conforming and conventional, or simply conventional. To put it simply, you want to get a conforming loan from a direct lender or mortgage broker. The sections below describe how to find a mortgage broker or direct lender for your Fannie Mae mortgage.

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Finding a Mortgage Broker

Mortgage brokers are independent agents that sell numerous financial products, frequently including Fannie Mae loans. This means they often have more flexibility than a bank’s loan officer would, since they are not restricted to a single institution. Additionally, mortgage brokers can perform much of the difficult work of gathering documents for you. When you apply for a loan, you must provide documentation regarding your income, employment history and more. This can be a laborious process, particularly if you have changed jobs or have an unusual income history. A mortgage broker can perform that part of the process for you, applying for loans on your behalf.

Although choosing a mortgage broker for a Fannie Mae mortgage may seem easier, there is a caveat. Because they work on commission and often as independent agents, brokers will charge additional fees and higher interest rates. This is where mortgage brokers earn their income. That means you may pay slightly more to complete the mortgage application process with a mortgage broker over a financial institution. Mortgage brokers often tout their ability to negotiate or even eliminate fees. However, depending on how a broker operates, it may not be enough to counteract the broker’s fees. If you are seeking a Fannie Mae lender, a mortgage broker will work, but do not be surprised if you find a slightly higher price tag for some brokers. Additionally, you may have to wait slightly longer to complete the process, since you are doing so indirectly.

To find a mortgage broker that will help you get a conforming Fannie Mae mortgage, you can go online. Plenty of websites have a list of independent agents looking for potential homebuyers. In addition to the internet, you can also get recommendations from your real estate agent. Finally, if you know friends and family who have recently purchased a new home, ask for recommendations from them.

When you are looking for a mortgage broker for a Fannie Mae mortgage, you should always call multiple brokers to compare. Ask brokers about fees, product options, experience and licensing. Many of the benefits offered by going the route of a broker can vary between individuals. For example, although brokers generally offer more products, some may have more limited options than others.

Additionally, when you call about a conforming loan, evaluate how the mortgage broker appears to operate. Consider whether the individual is forthcoming with information, prompt and helpful. If she or he dances around the subject of fees and makes unspecific claims, that could be a red flag. Look for a mortgage broker that tells you, upfront, what kinds of costs and fees you can expect to take on.

Find a Direct Lender

A Fannie Mae direct lender is a financial institution approved as either a direct seller or direct seller and servicer. This means the institution is approved to directly sell loans to Fannie Mae, which is good for you. Because there is no middle man, a direct lender saves you time and money while meeting all the requirements set by the GSE.

Some small financial institutions, like local credit unions, are not approved to operate as Fannie Mae direct sellers. That means that when they sell a loan to the company, they do so indirectly through a larger third-party conglomerate. The third party purchases numerous mortgages from numerous institutions, bundles them up in a package and sells them to Fannie Mae. This process lengthens the time it takes to complete the mortgage application process. A direct lender who does not require a third-party operator can complete the same process much more quickly.

A direct Fannie Mae lender may be preferable because an indirect lender might have additional, complicated requirements to maneuver. This is called a lender overlay, or additional rules imposed on top of the Fannie Mae conforming loan limits. Even if you meet all of the requirements set out by the GSE, an indirect lender could impose additional requirements. This is because individual institutions will adjust what their terms are based on what their data shows is safe or reliable. That means even if you meet the income limits set by Fannie Mae, you might not meet the ones set by your chosen institution. A direct lender with no overlay, simplifying the process of qualifying for a loan.

Unfortunately, it can be difficult to find a Fannie Mae direct seller. The FNMA website does not contain a comprehensive list of sellers, nor is it easy to find one elsewhere online. Instead, the best way to find a direct seller is to contact institutions and ask if they can do Fannie direct. Ask whether a particular institution has any lender overlays that would apply to a Fannie Mae home loan. If the answer is yes, move on because this probably means that you are not talking to a direct seller. When you do find a direct seller, ask about products, fees and expected turnaround time. Compare a few different institutions to decide which one works for you. You may choose to turn to a familiar institution, such as your banking firm, or a new one you find in your search. To learn more about finding a direct lender, download our in-depth guide.

What is Fannie Mae?

The Federal National Mortgage Association (Fannie Mae) provides affordable housing finance options for homebuyers and renters. Fannie Mae does not provide original mortgages. Rather, the organization purchases existing mortgages and guarantees them with government sponsorship. Fannie Mae mortgages have a fixed rate and can have a lifespan as long as 30 years.

Who is eligible for Fannie Mae?

Fannie Mae guarantees multi-family and single-family mortgages and loans. To qualify for either type of loan, an applicant must have an income lower than the local average, and the property he or she wants to buy must be worth less than the federal maximum. Further, applicants must have a credit score above 620. However, the minimum required credit score may change depending on how many properties the applicant plans to purchase.