Fannie Mae is the nickname used for Federal National Mortgage Association (or FNMA). It was established in 1938 by Congress during the Great Depression. This made more mortgages available to moderate and low income borrowers. It started to activate the real estate market.
Fannie Mae does not make and produce mortgages to borrowers. Fannie Mae buys mortgages from banks and other lenders. It combines loans together and changes them into mortgage-backed securities. Then it sells those securities to investors. This is how lenders can free up the money, so they can create more loans. This way mortgages can easily be bought and sold. Lenders have enough money to work with more borrowers.
To qualify for a Fannie Mae home loan, buyer has to look for an approved lender and complete an application for a loan. Lender looks at various factors and has strict criteria. Fannie Mae lets first time home buyer to get a loan with 3% down. Mannie Mae looks at the credit score too- the minimum has to be 620. By having a higher credit score, the buyer can get lower interest rates. A minimum credit score is 620 is needed to get a loan with a fixed interest rate. A minimum score of 640 is needed to qualify for an adjustable-rate loan.