source:
  type: guide
  id: fnma-sel-b5-7-01
  authority: Fannie Mae Selling Guide B5-7-01 — High LTV Refinance Loan and Borrower
    Eligibility
  description: Fannie Mae Selling Guide B5-7-01 — High LTV Refinance Loan and Borrower
    Eligibility.
  coverage_tier: operative
obligations:
- id: fnma-sel-b5-7-01-full
  canonical_id: fnma-sel-b5-7-01-full
  section: Fannie Mae Selling Guide B5-7-01 — High LTV Refinance Loan and Borrower
    Eligibility
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B5-7-01 — High LTV Refinance Loan and Borrower
      Eligibility
    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: 'B5-7-01, High LTV Reﬁnance Loan and Borrower Eligibility (08/06/2025)
      Introduction This topic contains information about the following aspects of
      the high LTV reﬁnance option, including: Overview Published May 6, 2026 803
      Existing Loan Requirements New Loan Requirements Borrower Eligibility Property
      Eligibility LTV Ratio Requirements Eligible Subordinate Financing Leasehold
      Estates Eligibility Multiple Financed Properties Overview The high LTV reﬁnance
      option is designed for Fannie Mae borrowers who are making their mortgage payments
      on time, but whose LTV ratios exceed the maximum allowed for standard limited
      cash-out reﬁnance transactions. Lenders are not required to evaluate borrower
      creditworthiness except for the requirements speciﬁcally stated in the high
      LTV reﬁnance topics. The current servicer or a new servicer may reﬁnance the
      existing loan. Lenders may not solicit Fannie Mae loans for reﬁnancing except
      in accordance with standard requirements in Lender Solicitation for Reﬁnancing
      found in B2-1.3-04, Prohibited Reﬁnancing Practices. Note: The acquisition of
      high LTV reﬁnances is currently paused. Existing Loan Requirements The following
      table provides requirements for the existing loan that is to be reﬁnanced under
      the high LTV reﬁnance option. ✓ The existing loan must.... be a ﬁrst lien, conventional
      mortgage loan owned or securitized by Fannie Mae. have a note date on or after
      October 1, 2017. have seasoning of at least 15 months - meaning at least 15
      months have passed from the note date of the existing loan to the note date
      of the new loan. For example, if the note date on the existing loan is January
      1, 2018, the note date of the new loan must be no earlier than April 1, 2019.
      Note: Loans that are part of a risk-sharing structure (for example, credit risk
      transfers) are eligible to be reﬁnanced under the high LTV reﬁnance option.
      Conversely, the following loans are not eligible for reﬁnance under the high
      LTV reﬁnance option: Published May 6, 2026 804 existing DU Reﬁ Plus TM or Reﬁ
      Plus TM loans; loans that are subject to outstanding repurchase demands; or
      loans that are subject to recourse, repurchase agreement, indemniﬁcation, or
      another negotiated credit enhancement required at origination for eligibility
      purposes are not eligible unless the new loan is also subject to a credit enhancement
      that meets eligibility requirements, or such credit enhancement is not required
      for eligibility purposes on the new loan. New Loan Requirements The following
      table provides requirements for the new loan resulting from the reﬁnance under
      the high LTV reﬁnance option. ✓ The new loan must... have an application date
      on or after November 1, 2018. Note: The acquisition of high LTV reﬁnances is
      currently paused. be either: • a ﬁxed-rate loan; or • an ARM that reﬁnances
      an existing ARM, with the new ARM having a minimum ﬁve-year ﬁxed rate term.
      have a term not to exceed 30 years. meet current general or high-balance loan
      limits, as applicable, at the time of loan delivery. have a newly executed Uniform
      Residential Loan Application (Form 1003) for the borrower(s) with all information
      completed, including borrower income, employment, and assets. provide a beneﬁt
      to the borrower in the form of at least one of the following: • a lower P&I
      payment; • a lower interest rate; • a shorter amortization term; or • movement
      to a more stable product (for example, from an ARM or step-rate modiﬁcation
      to a ﬁxed-rate loan). The new loan cannot be originated pursuant to Texas Constitution
      Section 50(a)(6). Temporary interest rate buydowns are not allowed. The standard
      limited cash-out reﬁnance requirements are modiﬁed for high LTV loan transactions.
      The new loan amount is limited to Published May 6, 2026 805 the payoﬀ of the
      UPB of the existing ﬁrst mortgage loan being reﬁnanced (including accrued interest);
      the ﬁnancing of closing costs, prepaid items, and points up to $5,000 total
      for the new loan; and cash back to the borrower up to $250. Excess proceeds
      may be applied as a curtailment on the new loan. Lenders may provide an incentive
      to the borrower(s) in the form of a payment to pay oﬀ a portion of the existing
      loan being reﬁnanced provided the following: no repayment is required, the payment
      is reﬂected on the settlement statement as a lender credit, and because any
      such reduction of the existing loan balance will impact the LTV ratio as it
      applies to the calculation of the new loan amount, lenders are advised to use
      caution as incentives have the potential to reduce the LTV ratio below the minimum
      allowed for this option. See B3-4.1-02, Interested Party Contributions (IPCs),
      for additional requirements that apply to lender incentives. Borrower Eligibility
      Generally, the borrower(s) on the loan being reﬁnanced (or the current borrower(s)
      if the existing loan was assumed) must be identical to the borrower(s) on the
      new loan. However, an existing borrower may be excluded from the new loan for
      either of the following: the remaining borrower(s) meets the mortgage payment
      history requirements and provides evidence that they have been making the payments
      on the existing loan from their own funds for the most recent 12 months prior
      to the application of the new loan, or due to the death of a borrower. Evidence
      of the deceased borrower’s death must be documented in the loan ﬁle. If this
      criteria cannot be met, the new loan must be underwritten in accordance with
      the Alternative Qualiﬁcation Path. See B5-7-03, High LTV Reﬁnance Alternative
      Qualiﬁcation Path for additional information. New borrowers may not be added
      to the new loan reﬁnanced via the high LTV reﬁnance option. Additionally, if
      the loan being reﬁnanced was assumed by the current borrower(s) prior to the
      reﬁnance, the current borrowers must have been qualiﬁed for the existing loan
      in accordance with the requirements of the Servicing Guide. Borrowers who have
      applied for or received a modiﬁcation are eligible for reﬁnancing provided the
      following: the borrower beneﬁt provision is met using the prevailing payment,
      and the payment history requirement is met. See Credit Eligibility Requirements
      in B5-7-02, High LTV Reﬁnance Underwriting, Documentation, and Collateral Requirements
      for the New Loan . Property Eligibility All Fannie Mae-eligible property types
      are permitted for reﬁnance under the high LTV reﬁnance option. For properties
      in condo, co-op, or PUD projects, all project review requirements are waived
      with the exception that the lender must conﬁrm the project is not a condo or
      co-op hotel or motel, houseboat project, timeshare, or segmented ownership project.
      For assistance in determining whether the project is a condo or co-op hotel
      or motel, see B4-2.1-03, Ineligible Projects. Published May 6, 2026 806 The
      lender must obtain property and ﬂood insurance in accordance with this Guide.
      LTV Ratio Requirements For the new loan to be eligible, the following table
      provides the minimum LTV ratio requirements for both ﬁxed- rate and ARM loans.
      Occupancy Type Units Minimum LTV Principal Residence 1 97.01% 2 85.01% 3-4 75.01%
      Second Home 1 90.01% Investment Property 1-4 75.01% The loan being reﬁnanced
      and the new loan do not have to represent the same occupancy. The occupancy
      of the subject property may have changed by the time of the high LTV reﬁnance
      transaction. There are no maximum LTV, CLTV, or HCLTV ratios for ﬁxed-rate loans.
      There is a maximum LTV ratio of 105% for ARM loans, but no maximum CLTV or HCLTV
      ratio. For comprehensive requirements see the Eligibility Matrix. Eligible Subordinate
      Financing New subordinate ﬁnancing is only permitted if it replaces existing
      subordinate ﬁnancing. In addition, the existing subordinate ﬁnancing may not
      be satisﬁed with the proceeds of the new loan, but may remain in place as long
      as it is resubordinated to the new loan, and may be simultaneously reﬁnanced
      as long as the new subordinate lien loan amount does not exceed the existing
      UPB. Other subordinate ﬁnancing requirements described in B2-1.2-04, Subordinate
      Financing are not applicable. Leasehold Estates Eligibility The term of the
      leasehold must run for at least ﬁve years beyond the maturity date of the mortgage,
      unless fee simple title will vest at an earlier date in the borrower. The lender
      is not required to perform any additional review of the leasehold terms. Published
      May 6, 2026 807 Multiple Financed Properties There are no limits on the number
      of ﬁnanced properties the borrower may own. The additional eligibility requirements
      for borrowers with multiple ﬁnanced properties in B2-2-03, Multiple Financed
      Properties for the Same Borrower do not apply. Recent Related Announcements
      The table below provides references to recently issued Announcements that are
      related to this topic. Announcements Issue Date Announcement SEL-2025-06 August
      06, 2025 Announcement SEL-2021-08 September 01, 2021 B5-7-02, High LTV Reﬁnance
      Underwriting, Documentation, and Collateral Requirements for the New Loan (09/03/2025)
      Introduction This topic contains information about underwriting requirements
      for the high LTV reﬁnance option, including: Underwriting Methods Underwriting
      Requirements Employment, Income, and Asset Veriﬁcation Valuation Requirements
      Underwriting Methods High LTV reﬁnance loans may be underwritten using DU or
      manually, with the exception of loans subject to the Alternative Qualiﬁcation
      Path (which must be manually underwritten). Loans secured by a second home or
      an investment property must be underwritten in DU and receive an Approve/Eligible
      recommendation, unless they are required to be underwritten in accordance with
      the Alternative Qualiﬁcation Path (see B5-7-03, High LTV Reﬁnance Alternative
      Qualiﬁcation Path). Loans Underwritten in DU When a limited cash-out reﬁnance
      loan caseﬁle that meets the minimum LTV requirement for a high LTV reﬁnance
      loan is underwritten in DU, internal data will be used to determine if Fannie
      Mae owns the loan on the property, and if that loan is eligible to be reﬁnanced
      using the high LTV reﬁnance option. Published May 6, 2026 808 When DU ﬁnds a
      loan for the subject property address using either the address provided on the
      DU loan application or the standardized address, DU will then conﬁrm that the
      Social Security number(s) for the borrower(s) on the new loan caseﬁle match
      those on the existing loan. The result of the Social Security number matching
      will be speciﬁed in a DU message. When none of the borrower Social Security
      numbers match, the loan caseﬁle will not be underwritten as a high LTV reﬁnance
      loan. DU will issue a message informing the lender that the Social Security
      number(s) does not match and remind the lender to conﬁrm the property address.
      When there is a Social Security number match, DU will underwrite the loan caseﬁle
      as a high LTV reﬁnance loan. If the Social Security number for any of the borrowers
      on the loan caseﬁle do not match using all nine digits, DU will advise the lender.
      When a borrower Social Security number is matched using 7 or 8 digits of the
      9-digit Social Security number, the DU message will specify that the Social
      Security numbers are one or two digits diﬀerent and will require the lender
      to conﬁrm the borrowers on the existing loan are the same borrowers that will
      be on the new loan. When there are two borrowers on the new loan and two borrowers
      on the existing loan, but only one borrower’s Social Security number matches,
      the DU message will specify that not all of the borrower Social Security numbers
      match and will require that the lender conﬁrm the borrowers on the existing
      loan are the same borrowers that will be on the new loan. When one borrower
      is on the new loan caseﬁle but more than one borrower is on the existing loan,
      the DU message will state that it appears that a borrower is being removed with
      transaction and refer the lender to the Selling Guide for additional requirements
      on removing a borrower with a high LTV reﬁnance transaction. When there is more
      than one borrower on the new loan caseﬁle but there is only one on the existing
      loan, the DU message will state that it appears that a borrower is being added
      with the high LTV reﬁnance transaction, and if that is the case, the high LTV
      reﬁnance loan is not eligible for delivery. Manually Underwritten Loans The
      lender must determine that all eligibility requirements are met for manually
      underwritten loans. Underwriting Requirements The following table provides underwriting
      and documentation requirements applicable to high LTV reﬁnance loans. Underwriting
      and Documentation Requirements Published May 6, 2026 809 Payment History To
      be eligible for the high LTV reﬁnance option, the payment history for the existing
      loan for the most recent 12 months must reﬂect • no delinquencies in the most
      recent 6 months, and • in months 7-12, no more than one, 30-day delinquency
      and no delinquency greater than 30 days. DTI Ratio There are no maximum DTI
      ratio requirements except for loans underwritten under the Alternative Qualiﬁcation
      Path. Credit Score There is no minimum credit score requirement except for loans
      underwritten under the Alternative Qualiﬁcation Path. Lenders must obtain and
      review a merged credit report in accordance with standard Selling Guide policies
      for payment history and pricing purposes. However, lenders are not required
      to comply with the waiting period and re- establishment of credit requirements
      for signiﬁcant derogatory credit events or the payoﬀ or satisfaction of a judgment
      identiﬁed on the credit report. Also, lenders are not required to review or
      consider Form 1003 Declarations in the underwriting evaluation. Property Status
      The lender does not need to conﬁrm the subject property is not currently listed
      for sale. Request for Transcript of Tax Return Each borrower must complete and
      sign a separate IRS Form 4506-C at or before closing. See B3-3.1-02, Tax Return
      and Transcript Documentation Requirements , for additional information. Published
      May 6, 2026 810 Higher-Priced Loan Requirements If the loan is a higher-priced
      mortgage loan or a higher- priced covered transaction under Regulation Z, the
      loan must comply with the Alternative Qualiﬁcation Path requirements. DU is
      unable to determine if a loan caseﬁle is a higher-priced mortgage loan or a
      higher-priced covered transaction under Regulation Z. The lender must make this
      determination. Lenders are not relieved of complying with Regulation Z by only
      adhering to the stricter representative credit score and DTI ratio. The loan
      must comply in all respects with Regulation Z requirements for such loans, including
      the underwriting and consumer protection requirements. Employment, Income, and
      Asset Veriﬁcation The lender must obtain one of the following for the new loan:
      a verbal veriﬁcation of employment for employment or self-employment income
      for at least one borrower, documentation of a non-employment income source,
      or documentation of liquid ﬁnancial reserves equal to 12 months of the new monthly
      housing payment. With the exception of loans underwritten under the Alternative
      Qualiﬁcation Path, lenders are not required to assess continuity of income,
      verify income, verify assets, or calculate the DTI ratio. Valuation Requirements
      For certain loan caseﬁles, DU will oﬀer value acceptance or value acceptance
      + property data - options to sell the loan to Fannie Mae without an appraisal.
      Otherwise, an appraisal with an interior and exterior inspection is required.
      If an appraisal is obtained, it must be used for valuation even if value acceptance
      is oﬀered by DU. A lender may only exercise the high LTV reﬁnance value acceptance
      or value acceptance + property data oﬀer if the ﬁnal submission of the loan
      caseﬁle to DU resulted in an oﬀer, an appraisal is not obtained for the transaction,
      and the oﬀer is not more than four months old on the date of the note and the
      mortgage. Lenders exercising the high LTV reﬁnance value acceptance oﬀer must
      deliver Special Feature Code 807 or 774 for value acceptance + property data.
      When the lender is required by law to obtain an appraisal, the lender must comply
      with such requirements, but Published May 6, 2026 811 may still exercise the
      oﬀer. For manually underwritten loans, an appraisal with an interior and exterior
      inspection is required. Repairs to a property damaged as the result of a disaster
      (as deﬁned by this Selling Guide) are not required prior to loan sale as long
      as the loan meets the applicable property insurance requirements. The lender
      is not required to perform an additional inspection and/or new appraisal of
      the property after a disaster. Recent Related Announcements The table below
      provides references to the Announcements that have been issued that are related
      to this topic. Announcements Issue Date Announcement SEL-2025-07 September 03,
      2025 Announcement SEL-2023-02 March 01, 2023 Announcement SEL-2021-03 April
      07, 2021 Announcement SEL-2020-07 December 16, 2020'
  judgment: false
