Many borrowers who fall just short of qualifying for a traditional "A Paper" loan can qualify for for a loan through Fannie Maes Expanded Approval loan program. The Fannie Mae Expanded Approval program bridges the gap between traditional subprime rates and regular Fannie Mae Financing.

Fannie Mae is a government sponsored enterprise that only buys conforming loans. The Fannie Mae expanded approval loan will have a lower interest rate than a subprime loan. This can result in a lower payment and significant savings for the borrower.

Fannie Mae expanded approval loans will have PMI payments that are much higher then a standard conforming loan. In fact some borrower may be able to actually get a lower payment through an Alt-A or sub prime lender then they can with a expanded approval of 2 or 3.

Borrowers who have had credit problems in the past often are excellent candidates for an Expanded Approval(EA) loan. EA loans have three different risk levels: 1,2, and 3. The higher the level number, the higher the associated risk and actual interest rate is with the loan.

Fannie Mae Expanded Approval loans are a good option for folks whose loan size exceeds that of the FHA loan limit. Fannie Mae Expanded Approvals also can be issued with a debt ratio much higher than standard subprime or FHA parameters.

Fannie Mae Expanded Approval Levels generally categorize a loan as a higher risk. Usually loans with lower amounts of reserves receive an Expanded Approval Level.

If you have been told you do not qualify for "A paper" financing and need a subprime loan, call Marty Searing at 414-303-1215 or msearing@mayfairmortgage.com for a free consultation. Let a mortgage professional see what kind of loan you can qualify for with our automated underwriting systems.

Fannie Mae Expanded Approval Loans are underwritten according to Fannie Mae Guidelines. Fannie Mae and Freddie Mac are government-sponsored enterprises which means that they are privately owned, but receive support from the Federal Government.

Fannie Mae's expanded approval programs often can qualify consumers for loans at fixed rates that they would otherwise not qualify for. The biggest downfall of the Expanded approval loans is that if you go over 80% LTV, the PMI, Private Mortgage Insurance, can be extremely high, especially on an Expanded Approval Level 3 loan. However, this PMI can be removed once the home has at least 20% equity in it.

 

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