source:
  type: guide
  id: fnma-sel-b2-1.4-01
  authority: Fannie Mae Selling Guide B2-1.4-01 — Fixed-Rate Loans
  description: Fannie Mae Selling Guide B2-1.4-01 — Fixed-Rate Loans.
  coverage_tier: operative
obligations:
- id: fnma-sel-b2-1.4-01-full
  canonical_id: fnma-sel-b2-1.4-01-full
  section: Fannie Mae Selling Guide B2-1.4-01 — Fixed-Rate Loans
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B2-1.4-01 — Fixed-Rate Loans
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B2-1.4-01, Fixed-Rate Loans (12/14/2022) Introduction This topic
      contains general information on ﬁxed-rate loans. Fixed-Rate Loan Eligibility
      Fixed-Rate Loan Eligibility Fannie Mae purchases or securitizes conventional,
      fully amortizing, ﬁxed-rate ﬁrst mortgage loans. Conventional ﬁxed-rate loans
      are not assumable as of the note date. When selling such loans to Fannie Mae,
      the Assumption Indicator in the Loan Delivery application must be "False" (which
      means not assumable). The payments must be structured as follows: level monthly
      installments of principal and interest (P&I), due on the ﬁrst day of each month,
      and payment of interest in arrears. The loan can be subject to a temporary interest
      rate buydown plan, provided that the subject property is secured by a principal
      residence or a second home. See B2-1.4-04, Temporary Interest Rate Buydowns
      for additional information. Recent Related Announcements Published May 6, 2026
      189 The table below provides references to recently issued Announcements that
      are related to this topic. Announcements Issue Date Announcement SEL-2022-10
      December 14, 2022 Announcement SEL-2019-01 February 06, 2019 B2-1.4-02, Adjustable-Rate
      Mortgages (ARMs) (12/10/2025) Introduction This topic contains information on
      ARMs, including: Overview Acceptable ARM Characteristics ARMs and Temporary
      Interest Rate Buydowns ARM Plan Indexes Standard Conventional ARM Plans Initial
      Note Rate Limitations Calculating the Fully Indexed Rate Determining ARM Acceptability
      Mortgage Margin Interest Accrual Rate Calculation ARMs and MBS Pools Pooling
      Standard Fannie Mae ARM Plans Without Special Disclosure ARM Disclosures Disclosures
      Regarding Availability of Index Values Disclosures Regarding Below-Market Interest
      Rates Disclosures Regarding Conversions Disclosures Regarding Assumption of
      ARMs Requirements Regarding Interest Rate and Monthly Payment Adjustments ARM
      Payment Shock DU Generic ARM Plans Generic ARM Underwriting Guidelines Loan-Level
      Price Adjustments Overview Fannie Mae purchases or securitizes fully amortizing
      ARMs that are originated under its standard or negotiated Published May 6, 2026
      190 plans. For maximum LTV/CLTV/HCLTV ratios and credit score requirements for
      ARMs, see the Eligibility Matrix. Acceptable ARM Characteristics The following
      table describes standard conventional Fannie Mae ARM requirements. ✓ Standard
      Conventional ARM Requirements Fannie Mae does not set a minimum remaining term
      requirement at the time of loan purchase. The initial adjustment period in months
      must align with the initial ﬁxed-rate period in years. For example, a "3-year
      ARM" must have an initial ﬁxed period of 36 months, and a "5-year ARM" must
      be 60 months. Each ARM plan must oﬀer lifetime and per-adjustment interest rate
      change limitations. • Lifetime interest rate change limitations apply to interest
      rate increases only. • Per-adjustment interest rate change limitations apply
      to interest rate increases and decreases. Mortgage interest rates may never
      decrease to less than the ARM’s margin, regardless of any downward interest
      rate cap. Fannie Mae restricts purchase or securitization of seasoned ARMs to
      those that are delivered as negotiated transactions. ARMs and Temporary Interest
      Rate Buydowns The following table provides parameters pertaining to ARMs subject
      to temporary interest rate buydowns. ✓ ARMs Subject to Interest Rate Buydowns
      Must be secured by a principal residence or second home. Are only permitted
      with an ARM plan that has an initial interest rate period of three years or
      more. Published May 6, 2026 191 ✓ ARMs Subject to Interest Rate Buydowns ARM
      plans that have an initial interest rate period of three years (Plan 4926) must
      be secured by a one- or two-unit property and must be structured as a 2-1 buydown
      with a buydown period no greater than 24 months. ARM plans with an initial interest
      rate period greater than three years (Plans 4927, 4928, and 4929) can be structured
      as either 3-2-1 or 2-1 buydowns (or other allowable structures per B2-1.4-04,
      Temporary Interest Rate Buydowns). ARM Plan Indexes A Fannie Mae ARM plan must
      be tied to the Secured Overnight Financing Rate (SOFR) Index. SOFR is a broad
      measure of the cost of borrowing cash overnight collateralized by U. S. Treasury
      securities in the repurchase agreement (repo) market. Fannie Mae uses a 30-day
      average of the SOFR index as published by the Federal Reserve Bank of New York.
      Standard Conventional ARM Plans To qualify as a Fannie Mae standard conventional
      ARM, the ARM must have all of the characteristics speciﬁed in the Standard ARM
      Plan Matrix for the speciﬁc ARM plan. The Standard ARM Plan Matrix is available
      on Fannie Mae''s website and is incorporated by reference into this Guide. Initial
      Note Rate Limitations Fannie Mae limits the initial note rate for ARMs with
      initial interest rate periods of less than ﬁve years. The limitation requires
      comparison of the initial note rate to the fully indexed rate that is applicable
      at the time the loan is originated. Calculating the Fully Indexed Rate The fully
      indexed rate is the sum of the value of the applicable index and the mortgage
      margin, which is then rounded to the nearest one-eighth percent. Note: Unless
      speciﬁc product terms provide otherwise, if the index plus gross margin equals
      a number that is equidistant between the higher and lower one-eighth percent,
      Fannie Mae rounds down to the nearest one-eighth percent. The applicable index
      value that determines the fully indexed rate is any index value in eﬀect during
      the 90 days that precede the note date. Published May 6, 2026 192 Determining
      ARM Acceptability Lenders must determine whether an ARM loan is acceptable for
      purchase by Fannie Mae by subtracting the initial note rate of the loan from
      the fully indexed rate in eﬀect when the loan originated. For 3- and 5-year
      ARMs, the diﬀerence must not exceed 3%. Mortgage Margin The mortgage margin
      is the “spread” that is added to the index value to develop the interest accrual
      rate for the mortgage. The maximum mortgage margin may be no more than 300 basis
      points. When lenders oﬀer a deeply discounted “teaser” rate for the mortgage,
      the margin is generally not used in determining the initial interest rate, but
      will be used to determine the interest rate for all future interest rate changes.
      Interest Accrual Rate Calculation ARM instruments provide for each new interest
      accrual rate to be calculated by adding the mortgage margin to the most recent
      index ﬁgure available 45 days before the interest change date. Fannie Mae uniform
      instruments for all standard ARM plans provide for rounding to the nearest one-eighth.
      Note: If a mortgage instrument provides otherwise, lenders must check with their
      Fannie Mae customer account team as there may be pooling and/or disclosure impact.
      Interest rate calculations are subject to the applicable per-adjustment and
      lifetime interest rate change limitations. ARMs and MBS Pools MBS pools cannot
      contain ARMs with provisions that allow or require the lender or servicer to
      change the minimum or maximum interest rate or the mortgage margin following
      an assumption, unless those provisions are waived prior to pooling such mortgage
      loans. Since this is not a feature contained in standard Fannie Mae ARM instruments,
      the lender must check with its Fannie Mae customer account team to determine
      acceptability of the nonstandard form. If such a unilateral waiver is legally
      precluded because the note provision would be beneﬁcial to the borrower and
      therefore requires borrower consent to waive, Fannie Mae will require evidence
      of a prior, duly written and executed bilateral waiver between the lender and
      the related borrower before allowing the loan to be pooled. For more information
      on pooling ARMs, see Chapter C3-5, Pooling Loans into ARM MBS. Pooling Standard
      Fannie Mae ARM Plans Without Special Disclosure To be pooled as a standard Fannie
      Mae ARM plan without a special disclosure, the ARM must meet all of the Published
      May 6, 2026 193 standard plan characteristics and must have a monthly payment
      that is due on the ﬁrst day of the month; have an original maturity no longer
      than 30 years; and be originated on the applicable Fannie Mae standard forms,
      with no modiﬁcations, which cover all other pooling requirements. See the Standard
      ARM Plan Matrix for additional information. ARM Disclosures Lenders must provide
      borrowers with disclosures in compliance with all applicable laws. Disclosures
      Regarding Availability of Index Values In addition to any disclosures required
      by applicable law, lenders must inform borrowers that the movement in the index
      on which the mortgage interest rate is based can be monitored and where the
      value for the index can be obtained. A number of periodicals publish current
      index values. Lenders may refer borrowers to any of the periodicals. Lenders
      should advise borrowers that an alternative published index will be selected
      (consistent with the provisions of the mortgage note) should the original index
      for a speciﬁc ARM plan no longer be available or published. This is commonly
      referred to as the “fallback” language in the note. Fannie Mae relies on the
      following “oﬃcial” source for the index used for Fannie Mae ARM plans: A 30-day
      average of the SOFR index as published daily by the Federal Reserve Bank of
      New York. Disclosures Regarding Below-Market Interest Rates Lenders must notify
      borrowers of current index values and mortgage margins if the borrower’s initial
      interest rate is below-market. Unless the lender is already required by regulation
      to make a comparable disclosure, the lender must show by example what the interest
      rate would be if the loan had been adjusted at the time of origination. Lenders
      must ensure that borrowers are aware of, and prepared for, the possibility of
      both an interest rate increase and a payment increase on the ﬁrst interest rate
      adjustment date. Disclosures Regarding Conversions Disclosures regarding conversions
      must include the following: Published May 6, 2026 194 ✓ Requirement: Conversion
      Disclosures Must Include The instances when the conversion option may be exercised.
      The time frame within which conversion requests must be received. The time frame
      within which the borrower must return executed conversion documents. Any fees
      that will be charged for processing the conversion. Note: Fannie Mae allows
      a $250 fee for ARM plans that have a monthly conversion option and a $100 fee
      for other ARM plans. Once the ARM plan converts to a ﬁxed-rate loan, the mortgage
      is no longer assumable. Any other special conditions. Disclosures Regarding
      Assumption of ARMs Although Fannie Mae ARMs are usually assumable, some plans
      do restrict assumability. When assumptions are restricted, the lender must advise
      the borrower of the exact nature of the restriction(s). Note: Lenders must disclose
      to borrowers that any ARM plan that includes an option to convert to a ﬁxed-rate
      mortgage cannot be assumed once the conversion option is exercised. See the
      Standard ARM Plan Matrix for information about the assumability provisions of
      Fannie Mae’s various ARM plans. Requirements Regarding Interest Rate and Monthly
      Payment Adjustments The following requirements apply to interest rate and monthly
      payment adjustments for ARM loans: The loan being delivered must not be subject
      to any current litigation with respect to the manner in which the interest rate
      and/or payment adjustments were calculated or implemented. The lender must not
      be servicing other ARMs that include interest rate and payment adjustment provisions
      similar to those of the mortgage being sold to Fannie Mae that are the subject
      of current litigation related to the manner in which adjustments were made.
      ARM Payment Shock ARMs that provide for low initial payments based on ﬁxed introductory
      rates that expire after a short period of time and then adjust to a variable
      rate for the remaining term of the mortgage loan have the potential for Published
      May 6, 2026 195 payment shock. “Payment shock” refers to the impact on the borrower’s
      ability to continue making the mortgage payments once the introductory rate
      expires. After the rate and payment increase, the borrower is subsequently faced
      with a large increase in monthly PITIA. Lenders must limit the impact of any
      potential payment shock on an ARM with an initial ﬁxed-rate period of ﬁve years
      or less by qualifying borrowers based on the qualifying rate described in B3-6-04,
      Qualifying Payment Requirements. DU Generic ARM Plans Generic ARM plans are
      provided for loan caseﬁles underwritten through DU. These generic ARM plans
      are available: as tools for underwriting with DU, and to assist lenders in underwriting
      negotiated ARMs and standard ARM plans that are not speciﬁcally identiﬁed in
      the ARM plan ﬁeld in the DO/DU user interface (such as all SOFR ARM plans).
      The following generic ARM plans are listed in the DO/DU user interface: FM GENERIC,
      1 YR, 1% ANNUAL Cap FM GENERIC, 1 YR, 2% ANNUAL Cap FM GENERIC, 3 YR FM-GENERIC,
      5 YR FM-GENERIC, 7 YR FM-GENERIC, 10 YR Note: The term in these generic plans
      refers to the initial ﬁxed-rate period. Generic plan names, such as FM GENERIC,
      10 YR, are only used to submit loan caseﬁles to DU. Lenders must identify the
      applicable Fannie Mae ARM plan number in closing documents and at delivery of
      the loan to Fannie Mae. Generic ARM Underwriting Guidelines DU applies standard
      Fannie Mae ARM underwriting and eligibility guidelines to the generic ARM plan
      equivalent based on the initial interest rate adjustment period. ✓ For generic
      ARM plans, DU will … apply standard ARM eligibility guidelines. qualify borrowers
      based on ARM qualifying guidelines in B3-6-04, Qualifying Payment Requirements.
      allow temporary buydowns based on standard ARM guidelines. Published May 6,
      2026 196 ✓ For generic ARM plans, DU will … allow generic ARM plans equivalent
      to standard ARM plans on special mortgage products. return a message stating
      that the lender must ensure that the loan is eligible for purchase. Loan-Level
      Price Adjustments An LLPA applies to certain ARM loans. These LLPAs are in addition
      to any other price adjustments that are otherwise applicable to the particular
      transaction. See the Loan-Level Price Adjustment (LLPA) Matrix. Recent Related
      Announcements The table below provides references to recently issued Announcements
      that are related to this topic. Announcements Issue Date Announcement SEL-2025-10
      December 10, 2025 Announcement SEL-2022-10 December 14, 2022 Announcement SEL-2022-09
      October 05, 2022 Announcement SEL-2022-05 June 01, 2022 Announcement SEL-2021-09
      October 06, 2021 Announcement SEL-2021-08 September 01, 2021 Announcement SEL-2020-07
      December 16, 2020 Announcement SEL-2020-02 April 01, 2020 Announcement SEL-2019-08
      October 02, 2019 Announcement SEL-2019-05 June 05, 2019 Announcement SEL-2019-01
      February 06, 2019 Published May 6, 2026 197'
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