source:
  type: guide
  id: fnma-sel-b3-4.3-11
  authority: Fannie Mae Selling Guide B3-4.3-11 — Trade Equity
  description: Fannie Mae Selling Guide B3-4.3-11 — Trade Equity.
  coverage_tier: operative
obligations:
- id: fnma-sel-b3-4.3-11-full
  canonical_id: fnma-sel-b3-4.3-11-full
  section: Fannie Mae Selling Guide B3-4.3-11 — Trade Equity
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B3-4.3-11 — Trade Equity
    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: 'B3-4.3-11, Trade Equity (12/16/2020) Introduction This topic
      contains information on trade equity, including: Trade Equity Calculating the
      Equity Contribution Documentation Requirements Published May 6, 2026 437 Trade
      Equity Trade equity is an acceptable source of funds to supplement the borrower’s
      minimum borrower contribution provided the following requirements are met: The
      seller’s equity contribution for the traded property must be a true-value consideration
      supported by a current appraisal. The borrower must make the minimum required
      contribution from their own funds unless: the LTV or CLTV ratio is less than
      or equal to 80%; or the borrower is purchasing a one-unit principal residence
      and meets the requirements to use gifts, donated grant funds, or funds received
      from an employer to pay for some or all of the borrower''s minimum contribution.
      See B3-4.3-04, Personal Gifts; B3-4.3-06, Grants and Lender Contributions; and
      B3-4.3-08, Employer Assistance, for additional information. These requirements
      apply to all transactions that involve property trades, including those that
      are evidenced by two separate contracts that have the buyer and the seller on
      one contract reversing roles on the second contract. Note: Trade equity is entered
      in the loan application as a credit to the transaction, which will reduce the
      borrower’s required funds to close. Calculating the Equity Contribution The
      equity contribution is determined by subtracting the outstanding mortgage balance
      of the property being traded, plus any transfer costs, from the lesser of either
      the property’s appraised value or the trade-in value agreed to by both parties.
      For trade equity requirements for manufactured housing, see Section B5–2–03,
      Manufactured Housing Underwriting Requirements. Documentation Requirements For
      real property, the transfer deed must be recorded. In addition, lenders must
      obtain the following: A search of the land records to verify the ownership of
      the property and to determine whether there are any existing liens on the property.
      Proof of title transfer and satisfaction of any existing mortgage liens for
      which the borrower was liable. Recent Related Announcements The table below
      provides references to recently issued Announcements that are related to this
      topic. Published May 6, 2026 438 Announcements Issue Date Announcement SEL-2020-07
      December 16, 2020'
  judgment: false
