source:
  type: guide
  id: fnma-sel-b7-3-02
  authority: Fannie Mae Selling Guide B7-3-02 — Property Insurance Requirements for
    One-to Four-Unit Properties
  description: Fannie Mae Selling Guide B7-3-02 — Property Insurance Requirements
    for One-to Four-Unit Properties.
  coverage_tier: operative
obligations:
- id: fnma-sel-b7-3-02-full
  canonical_id: fnma-sel-b7-3-02-full
  section: Fannie Mae Selling Guide B7-3-02 — Property Insurance Requirements for
    One-to Four-Unit Properties
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B7-3-02 — Property Insurance Requirements
      for One-to Four-Unit Properties
    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: 'B7-3-02, Property Insurance Requirements for One-to Four-Unit
      Properties (02/07/2024) Introduction This topic contains information on property
      insurance requirements for one- to four-unit properties, including: Coverage
      Requirements Determining the Required Coverage Amount Deductible Requirements
      Coverage Requirements Published May 6, 2026 859 Property insurance policies
      for one- to four-unit properties securing loans purchased by Fannie Mae should
      be written on a "Special" coverage form or equivalent. At a minimum, the coverage
      must include the perils listed in the following table. ✓ Required Perils Fire
      or lightning Explosion Windstorm (including named storms designated by the U.S.
      National Weather Service or the National Oceanic and Atmospheric Administration
      by a name or number) Hail Smoke Aircraft Vehicles Riot or civil commotion If
      a property insurance policy excludes or limits coverage of any of the required
      perils, the borrower must obtain an acceptable stand-alone policy that provides
      adequate coverage for the limited or excluded peril (see B7-3-05, Additional
      Insurance Requirements, for additional information). The property insurance
      policy must provide for claims to be settled on a replacement cost basis. Property
      insurance policies that provide for claims to be settled on an actual cash value
      basis are not acceptable. Policies that limit, depreciate, reduce or otherwise
      settle losses at anything other than a replacement cost basis are also not acceptable.
      Additional requirements apply to properties with solar panels that are leased
      from or owned by a third party under a power purchase agreement or other similar
      arrangement. See B2-3-04, Special Property Eligibility Considerations, for additional
      requirements. See B7-3-08, Mortgagee Clause, Named Insured, and Notice of Cancellation
      Requirements for additional requirements applicable to a one- to four-unit property.
      Determining the Required Coverage Amount The lender or servicer must verify
      that the property insurance coverage amount for a ﬁrst mortgage secured by a
      one- to four-unit property is at least equal to the lesser of: Published May
      6, 2026 860 100% of the replacement cost value of the improvements as of the
      current property insurance policy eﬀective date, or the unpaid principal balance
      of the loan, provided it equals no less than 80% of the replacement cost value
      of the improvements as of the current property insurance policy eﬀective date.
      The source that the lender or servicer uses to verify the coverage amount may
      be the property insurer, an independent insurance risk specialist, or other
      professional with appropriate resources to make such a determination. This may
      include, but is not limited to, a statement from the insurer or other applicable
      professional, a replacement cost estimator, or an insurance risk appraisal.
      If the coverage amount does not meet the minimum required, coverage that does
      provide the minimum required amount must be obtained. The following table provides
      the steps to calculate the amount of required property insurance coverage. Step
      Description 1 Compare the replacement cost value of the improvements to the
      unpaid principal balance (UPB) of the loan. 1A If the replacement cost value
      of the improvements is less than the UPB, the replacement cost value is the
      amount of coverage required. 1B If the UPB of the loan is less than the replacement
      cost value of the improvements, go to Step 2. 2 Calculate 80% of the replacement
      cost value of the improvements. 2A If the result of this calculation is equal
      to or less than the UPB of the loan, the UPB is the amount of coverage required.
      2B If the result of this calculation is greater than the UPB of the loan, this
      calculated ﬁgure is the amount of coverage required. Note: When calculating
      the required amount of property insurance coverage, the loan amount must be
      used at origination and the UPB must be used during servicing of the loan. Examples:
      Category Property A Property B Property C Replacement Cost Value $90,000 $100,000
      $100,000 Published May 6, 2026 861 Category Property A Property B Property C
      UPB $95,000 $90,000 $75,000 80% of the Replacement Cost Value — $80,000 $80,000
      Required Coverage $90,000 $90,000 $80,000 Calculation Method Step 1A Step 2A
      Step 2B See Servicing Guide, B-2-01, Property Insurance Applicable to All Property
      Types, for additional servicer responsibilities related to property insurance
      for second mortgages. Deductible Requirements The maximum allowable deductible
      for all required property insurance perils for one-to four-unit properties is
      5% of the property insurance coverage amount. When a property insurance policy
      includes multiple deductibles, such as a separate deductible that applies to
      windstorms, or a separate deductible that applies to a speciﬁc property element
      such as the roof, the total amount for such deductibles applicable to a single
      occurrence must be no greater than 5% of the property insurance coverage amount.
      Recent Related Announcements The table below provides references to recently
      issued Announcements that are related to this topic. Announcements Issue Date
      Announcement SEL-2024-01 February 07, 2024 Announcement SEL-2022-10 December
      14, 2022 Announcement SEL-2021-11 December 15, 2021 Announcement SEL-2020-07
      December 16, 2020 Published May 6, 2026 862'
  judgment: false
