Troy, Michigan-based United Wholesale Mortgage launched its latest product which offers conventional financing on up to 97% loan to value, making it one of the first wholesale lenders to offer the low down payments  

This move aligns the lender with the Federal Housing Finance Agency’s initiative to expand the credit box to first-time homeowners.

Fannie Mae announced it would soon begin offering a 97% LTV mortgages during the Mortgage Bankers Association’s annual convention & Expo in October, with Freddie Mac assumed to likely follow suit. And it did.  

On Dec. 8, both government-sponsored enterprises officially announced their individual 97% loan-to-value products. The government-sponsored enterprise will package these loans into pools and securitize the mortgages on the secondary market.

Fannie Mae’s newly released version of Desktop Underwriter 9.2 allowed UWM to reintroduce standard conventional and MyCommunity Mortgage financing up to 97% LTV for first-time homebuyers with a DU approval.

“This program is significant because it opens up new business opportunities for both real estate agents and originators.  Real estate agents will be able to help a broader range of perspective buyers and originators can offer their clients lower down payments and lower monthly payments,” the release said.

“It also gives borrowers that are traditionally forced into government loans the opportunity to obtain conventional financing,” it added.

Program highlights include:

  • Instant M.I. available up to 97%
  • Gift funds eligible for down payment and reserves
  • Available on purchase and rate/term refinance transactions
  • Standard conventional and MyCommunity Mortgage options
  • At least one borrower must be a first-time homebuyer
  • No homebuyer counseling required for standard 97% conventional
  • 1-unit properties only

UWM is not the first lender to join the FHFA bandwagon, with lenders like 360 Mortgage Group and ditech beginning to announce they are rolling in 97% LTV into their product offerings.

And it certainly won’t be the last as several lenders have come out and said this is definitely a product they would offer, but haven't made anything official.

Most of the support for the new products is coming from nonbank and smaller lenders like AMCAP Mortgage, which is based in Houston, whose CEO and Director, Garrett Clayton, told HousingWire that this is definitely a product it would offer. 

“Our philosophy is that we are a sell organization, and if that is a product that the agencies are going to put out there, we will have to offer that to our loan originator base,” Clayton said. “From the mortgage side, why would anyone say this is not a positive?”