New mortgage products: what is available to borrowers now

Written by Samantha SheltonNMLS 1647301Updated November 2026

Almost every “new mortgage product” is new packaging on one of five underlying structures, and only two of the five come with a published rulebook you can read before you sign. The tell is page 1 of your Loan Estimate: Regulation Z requires a yes-or-no answer under “Prepayment Penalty” and “Balloon Payment,” plus a product label reading Negative Amortization, Interest Only, Step Payment, Balloon Payment or Seasonal Payment whenever one of those features applies.

No flags means standard terms; any flag means non-standard terms, which isn’t automatically a bad deal but is always a reason to price the plain-vanilla alternative next to it.

Learn what counts as a new mortgage product, the five structures they fall into, and the six questions that tell you whether one is worth taking. For market backdrop, see our Mortgage Rates & Market guide.

Key takeaways:

• Two rulebooks, five structures: Agency and government programs publish their terms; the 2026 conforming baseline of $832,750 on a one-unit home is roughly where that published pricing stops.
• A qualified mortgage can’t carry four features: Negative amortization, interest-only payments, balloon payments and terms over 30 years fall outside the definition, which also caps points and fees at 3% of the loan amount on loans of $137,958 or more for 2026.
• Prepayment penalties are capped, not banned: Where a loan may carry one, Regulation Z limits it to 2% of the amount prepaid in the first two years and 1% in the third, and bars it after 36 months.

What counts as a “new mortgage product”?

A new mortgage product is a loan structure that differs from the standard 30-year fully amortizing mortgage in how it amortizes, prices, documents income, or allocates risk. Three different things get sold under that phrase.

• A guideline change is not a new product: When an agency raises a limit or accepts a new credit score model, the loan is unchanged. Those are rule updates, tracked in Industry Updates & Rules.
• A new structure is a real change: A different amortization schedule, index, documentation method or lien position changes what you owe and when.
• A branded offer is usually neither: Most “exclusive” programs are an existing structure with a lender’s name on it. The structure decides your risk; the brand decides who services the file.

Rule changes are dated, numbered and public, so you can verify one in minutes, as the impact of new mortgage regulations shows. Structures built outside the agencies leave no such record. For what lenders have rolled out, see innovative mortgage products.

The five categories of newer mortgage product structures

Five categories cover nearly everything on the market, and they sort by one question: who writes the terms.

1. Agency affordable conventional programs

These reach 97% loan-to-value, meaning 3% down, and they are the most heavily documented products on the market. HomeReady and Home Possible both cap qualifying income at 80% of area median income and reach 97% LTV on a one-unit principal residence through automated underwriting; Fannie Mae’s HomeReady program details and Freddie Mac’s Home Possible program details are open to anyone, which is the point of this category. The Conventional 97 loan is the same math without the income cap. Insurance on all three ends: under the Homeowners Protection Act you may request PMI cancellation at 80% of original value, and your servicer must terminate it at 78%. Compare HomeReady mortgages and Home Possible loans.

2. Government-insured and guaranteed programs

FHA, VA and USDA sit at 3.5%, zero and zero down, and their rulebooks are federal documents, not corporate ones. FHA’s minimum required investment is 3.5% of adjusted value at a 580 credit score, dropping to 90% maximum financing between 500 and 579, under HUD Handbook 4000.1.¹ VA loans require no down payment and no monthly mortgage insurance; the Blue Water Navy Vietnam Veterans Act of 2019, Public Law 116-23, eliminated county loan limits for borrowers with full entitlement on loans closed on or after January 1, 2020.² USDA’s Section 502 guaranteed program offers 100% financing within a 115%-of-area-median-income household cap.

The insurance exit decides most files. FHA charges 1.75% upfront and, on a term over 15 years with a base loan amount of $726,200 or less, an annual premium of 0.55% above 95% LTV for the loan term, 0.50% from 90.01% to 95% LTV for the loan term, and 0.50% for 11 years at 90% LTV or below, under HUD Mortgagee Letter 2023-05. Base loan amounts above $726,200 run 0.75% and 0.70% on the same LTV bands. That $726,200 figure is the one Handbook 4000.1 still prints, though ML 2023-05 also says it amends the threshold to the national conforming loan limit, so confirm which number your lender applies. The gap is explained in Federal Housing Administration updates. FHA does not follow the conventional cancellation schedule. Our comparison of government-backed loans runs all three together.

3. Payment-structure products

These keep standard documentation and change the payment shape, which is why they get mistaken for something new.

• Temporary buydowns: A funded escrow lowers your payment for one to three years, then steps it up to the note rate. Fannie Mae caps the reduction at 3%, annual increases at 1% and the period at three years, and requires that you qualify at the note rate. Seller- or builder-funded money counts against interested-party contribution limits: 3% above 90% LTV, 6% from 75.01% to 90%, 9% at 75% or below on a principal residence.
• Adjustable-rate mortgages: The index moved, not the concept. Fannie Mae’s ARM plans track the 30-day average SOFR index, so what varies between offers is the margin and the caps. See the pros and cons of adjustable-rate mortgages.
• Interest-only structures: Payments cover interest, then recast to a fully amortizing payment. That feature disqualifies the loan from the qualified mortgage definition, which is why these are portfolio products. Read how interest-only mortgages work first.

The step-up is where buydowns surprise people. Hypothetical example, not an offer: on a $350,000 loan, a 2-1 buydown cuts the note rate two points in year one and one in year two, with the seller escrowing roughly those 24 months of savings. The payment then rises twice, and you qualified at the note rate throughout.³

4. Alternative-documentation and portfolio products

Bank statement, asset depletion, profit-and-loss and debt-service-coverage programs qualify borrowers on deposits, assets or property cash flow instead of tax returns, and no agency publishes their terms. That absence is the defining feature: the same category name at two lenders can mean different reserves, terms and prepayment penalties. Note too that credit extended to acquire, improve or maintain non-owner-occupied rental property is business purpose and exempt from Regulation Z entirely, so there is no Loan Estimate, no Closing Disclosure, no ability-to-repay determination and no federal cap on a prepayment penalty. If you’re self-employed and buying a home to live in, see non-QM loans for self-employed borrowers.

5. Equity-based contracts and junior liens

This category runs from ordinary second mortgages to contracts that aren’t loans at all. A home equity line of credit is open-end credit, and Regulation Z’s ability-to-repay section expressly does not apply to it, so a HELOC and a first mortgage aren’t underwritten under the same rule even at the same lender.

• Piggyback second mortgages: A simultaneous second lien holds the first at 80% LTV so PMI never attaches. The second carries its own rate and payment, so run it against a single loan with PMI.
• Home equity sharing agreements: An investor advances cash for a contractual share of your home’s future value. These are marketed as investor contracts rather than loans, so the appreciation split, valuation method, term and exit triggers are set by the provider and standardized by no one.
• Special purpose credit programs: Regulation B lets creditors run programs for specific groups under a written plan. Since a 2026 amendment, a program run by a for-profit creditor may not use race, color, national origin or sex as an eligibility factor. They’re lawful and temporary by nature, funded and withdrawn by individual lenders and nonprofits rather than by an agency, so confirm one is open before building a purchase around it.

Which 2026 rule changes look like new products but aren’t?

Several changes this year widen who fits an existing program without creating a new loan. Each one has a dated public record you can read.

Did the credit score rules change for conventional loans?

Yes, the model changed, not the loan. According to the Federal Housing Finance Agency, Fannie Mae and Freddie Mac expanded VantageScore 4.0 to all approved lenders on September 9, 2026, so lenders may choose between Classic FICO and VantageScore 4.0 on loans sold to the Enterprises. FHFA reports that FICO 10T is not currently eligible for delivery and that no retirement date has been announced for Classic FICO. See what a good credit score to buy a house is for how scores affect pricing.

What did FHA publish in 2026?

HUD’s list of mortgagee letters shows ML 2026-11, “Updated Minimum Decision Credit Score Methodology for the Implementation of Alternative Credit Scores,” ML 2026-06, which increases the maximum number of draw requests in the Limited 203(k) rehabilitation program, and ML 2026-12 on underwriting eligibility for “Build-To-Rent” developments. Each letter is numbered, so a lender’s claim about a new FHA option can be checked against the list. The renovation side is covered in the benefits of FHA 203(k) loans.

Can a USDA loan now finance a home with a rental unit?

Starting December 28, 2026, yes. A USDA Rural Development final rule published October 29, 2026 (91 FR 68025) amends the guaranteed loan regulation to permit financing of single family homes with income producing accessory dwelling units, and says properties with non-income producing ADUs remain eligible. The household income test is set in 7 CFR 3555.10, which defines moderate income as the greater of several measures, starting with 115 percent of U.S. median family income. More in recent changes to USDA loan programs.

What is the new VA partial claim?

It is a foreclosure-avoidance tool for existing VA borrowers, not a purchase product. Public Law 119-31, approved July 30, 2025, caps a partial claim at 25 percent of the unpaid principal balance on the date it is made and bars new partial claims five years after enactment, and the codified section, 38 U.S.C. 3737, allows only one partial claim per loan. According to VA, the program is open for submissions, a 3-month trial payment plan comes first, servicers have until November 28, 2026, to add partial claims to their systems, and you repay it when you pay off the loan or sell the home.

VA also tracks the conforming limit. Its circulars list carries Circular 26-25-10, dated December 1, 2025, on FHFA’s 2026 conforming loan limits, set to be rescinded January 1, 2027. That figure matters to a veteran whose entitlement is still in use: under Public Law 116-23, the guaranty on that loan is capped at 25 percent of the Freddie Mac conforming loan limit, reduced by entitlement not yet restored.

Agency or non-agency? Ask that before anything else

One question sorts the market: can you read the rulebook? Fannie Mae’s Selling Guide and Freddie Mac’s Seller/Servicer Guide are online and versioned, tracked in Federal Housing Finance Agency updates, and FHA publishes changes as numbered, dated mortgagee letters that control over still-posted handbook text, as Federal Housing Administration updates explains. Non-agency products have no equivalent, which isn’t a red flag by itself but removes your ability to verify anything except what you were handed. If a lender answers “our guidelines,” get the term sheet in writing and treat the note and riders as the governing document. Non-conforming loans sit in the same position.

What did the CFPB find about home equity contracts?

The Consumer Financial Protection Bureau reported in its Issue Spotlight on home equity contracts, published January 15, 2025, that the market’s total volume is estimated at between $2 billion and $3 billion, and that under many contracts the settlement amount grows at a rate of 19.5% to 22% per year in the early years. The report found these contracts expensive compared with other home-secured financing and warned that homeowners who cannot pay the full settlement amount might be forced to sell their home or face foreclosure.

Per the same CFPB report, the homeowner must repay by the end of the contract term, often 10 to 30 years, or when a triggering event such as a home sale occurs. Before signing one, get the settlement formula in writing and price it next to a home equity loan or a HELOC on the same home; using home equity wisely walks through that comparison.

How to evaluate a new mortgage product: six questions

Run all six before you commit. The first three take about ten minutes and eliminate most bad fits.

• 1. What does the Loan Estimate’s Loan Terms box say? You’re entitled to one by the third business day after the lender receives your application. It answers “Prepayment Penalty” and “Balloon Payment” yes or no, and a balloon payment is any payment more than twice a regular periodic payment.
• 2. Is it a qualified mortgage? That means substantially equal payments, no negative amortization, no deferral of principal, no balloon, a term of 30 years or less, points and fees at or under 3% of the loan amount for loans of $137,958 or more in 2026, and an APR under the price-based cap, which for 2026 is 2.25 percentage points above the average prime offer rate on a first lien of $137,958 or more, 3.5 points from $82,775 to $137,958, and 6.5 points below $82,775.
• 3. Does the ability-to-repay rule even apply? It covers closed-end consumer loans secured by a dwelling, but not HELOCs, reverse mortgages, timeshares, bridge loans or construction phases of 12 months or less, housing finance agency credit, or certain forgiven or deferred subordinate liens.
• 4. When does the mortgage insurance stop? Conventional PMI cancels on request at 80% of original value and automatically at 78%; FHA’s annual premium runs 11 years only at 90% LTV or below. The exit date often beats the rate.
• 5. What does the payment do in months 13, 25 and 61? Write out the payment at each buydown step, at an ARM’s first adjustment and cap, and at an interest-only recast. Your debt-to-income ratio has to survive the step-up.
• 6. Which terms are lender terms, not agency rules? Lock periods, extension fees, float-downs, overlays and prepayment penalties are set by the lender or investor, so they’re negotiable in a way agency requirements aren’t. For where note rates sit, check the Freddie Mac Primary Mortgage Market Survey.

What “non-standard terms” actually means on a non-agency loan

Six terms account for nearly all the risk in newer non-agency structures, and every one is defined in federal regulation, so you can check them by name.

• Prepayment penalties: Permitted only on a fixed-rate qualified mortgage that isn’t higher-priced, capped at 2% of the amount prepaid in the first two years and 1% in the third, none after 36 months. A high-cost mortgage may not carry one.
• Balloon payments: Any payment more than twice a regular periodic payment. A balloon loan can be a qualified mortgage only when made by certain small creditors in rural or underserved areas; see how balloon mortgages work.
• Interest-only and negative amortization: Either disqualifies a loan from the qualified mortgage definition, and negative amortization is barred on a high-cost mortgage.
• Terms over 30 years: A 40-year term isn’t illegal, it just can’t be a qualified mortgage. Longer amortization lowers the payment and raises lifetime interest.
• The high-cost tripwire: A first lien becomes high-cost when its APR exceeds the average prime offer rate by more than 6.5 percentage points, or points and fees exceed 5% of the loan amount on loans at or above the annually indexed threshold, which is $27,592 for 2026.
• Assumability: FHA, VA and USDA loans are generally assumable with approval; conventional loans generally aren’t, and non-agency products vary by contract. See what an assumable mortgage is.

None of these makes a product wrong for you. A self-employed borrower with strong deposits and no usable tax returns may have one workable path, and it will carry non-standard terms. Know which of the six you’re accepting, and what you’re paid for it.

What if a product feature first appears on your Closing Disclosure?

Federal timing rules give you a Closing Disclosure at least three business days before closing (see the home closing process for every deadline). According to the CFPB’s Closing Disclosure explainer, check that your Cash to Close matches your most recent Loan Estimate, and if something looks different from what you expected, ask why.

For a new or non-standard product, read the Loan Terms table and the product label next to the Loan Estimate’s. A feature that shows up for the first time on the Closing Disclosure, such as an interest-only period, a balloon payment, a prepayment penalty or an adjustable rate tied to an index you were never shown, is a reason to stop and ask before you sign, not a detail to sort out after closing.

• Your appraisal: You are entitled to a copy before closing; on an alternative-documentation loan priced off value, that copy is how you check the number the loan rests on.
• Competing offers: According to the CFPB, comparing an offer with Loan Estimates from other lenders is how you tell whether it is competitive. For a non-standard product, request the plain conventional or government version from each lender too, so every Loan Estimate is read against the same baseline.
• Fair lending: According to the Office of the Comptroller of the Currency, the Equal Credit Opportunity Act prohibits discrimination in credit transactions based on race or color, national origin, religion, sex, marital status, age (when the applicant can contract), receipt of public assistance income, or the good faith exercise of rights under the Consumer Credit Protection Act. That applies to a new structure exactly as it does to a 30-year fixed.

What Michigan buyers should know

Michigan’s most useful “newer product” is a state agency program with a published rulebook, which puts it in the first category rather than the fourth.

• MI Home Loan carries a 640 credit floor and a $566,355 sales price limit: The Michigan State Housing Development Authority’s first mortgage is open to first-time buyers statewide and repeat buyers in targeted areas, and can be structured as conventional, FHA, VA or USDA financing. The sales price limit took effect June 1, 2026, and FHA alone goes to 580, so adding state assistance raises the bar.
• MI 10K DPA adds up to $10,000, only behind MSHDA’s own first mortgage: It covers down payment, closing costs and prepaids as an interest-free, non-amortizing loan deferred until you pay off, sell, refinance or move out. It must be paired with a MSHDA MI Home Loan first mortgage, requires a homebuyer education certificate for every buyer, and carries no monthly payment.
• The deferred second is a structure, not a freebie: Regulation Z’s ability-to-repay section carves out housing finance agency credit and certain forgiven or deferred subordinate liens, which is why an assistance second behaves differently from a piggyback second and gets structured at application, not bolted on before closing.
• Limits move on MSHDA’s schedule: Income and sales price limits are published by county and household size, higher in federally targeted areas, and funding changes, so confirm current status. See state-specific mortgage assistance programs for what stacks.

Who has to be licensed to offer you a mortgage in Michigan?

Michigan law answers it directly. Under MCL 445.1652, part of the Mortgage Brokers, Lenders, and Servicers Licensing Act (Act 173 of 1987), “A person shall not act as a mortgage broker, mortgage lender, or mortgage servicer” without first obtaining a license under the act or registering under section 6, unless a listed exemption applies. The Michigan Department of Insurance and Financial Services runs the DIFS Locator, which finds information about companies and professionals in insurance and financial services who do business in Michigan, and NMLS Consumer Access shows each mortgage license by state. Check both for the company on your Loan Estimate before you sign.

• Michigan’s fair housing law reaches further than the federal list: MCL 37.2502, part of the Elliott-Larsen Civil Rights Act, bars a person engaging in a real estate transaction from discriminating in its terms, conditions or privileges on the basis of religion, race, color, national origin, age, sex, sexual orientation, gender identity or expression, familial status, or marital status.
• “First-time buyer” has a MSHDA definition: Per the MI Home Loan program page, a first-time homebuyer is one who has not owned a home in the previous three years, and household income limits vary with family size and property location. A buyer who sold a home four years ago and has not owned one since can count as first-time for MSHDA.

FAQ: New mortgage products

Here are answers to common questions about new mortgage products.

What new mortgage products are available?

Fewer genuinely new ones than the marketing suggests. Most offers are one of five structures: agency affordable conventional at 3% down, government-insured at 3.5% or zero down, payment-structure products like buydowns and ARMs, alternative-documentation portfolio loans, and equity-based contracts and junior liens. What changes year to year is usually a limit or an eligibility rule, not the loan. See alternative financing options for home buyers for what sits outside the core programs.

What is the current conforming loan limit?

$832,750 for a one-unit property in most counties for 2026, including all 83 Michigan counties, with a $1,249,125 ceiling in designated high-cost areas, per the Federal Housing Finance Agency’s announcement of November 25, 2025, a 3.26% increase over the 2025 baseline of $806,500. At or under your county’s figure generally means conventional pricing; above it you’re shopping a different product. FHFA normally announces the next year’s limits in late November, so if you close in the new year, check for the 2027 figure. Look up any county in FHFA’s conforming loan limit values, and see first-time home buyer programs for what layers under it.

What is the minimum down payment on a mortgage?

Zero, through a VA loan if you’re an eligible service member, veteran or surviving spouse, or a USDA loan on an eligible rural property within income limits. Otherwise the floor is 3% on a conventional HomeReady, Home Possible or Conventional 97 loan, or 3.5% on FHA at a 580 credit score. State agency assistance can cut cash to close further. See buying a home with a low down payment for how the sources stack.

Which low-down-payment loan is the right fit?

It depends on credit and how long you’ll keep the home. Conventional 3%-down programs usually win with stronger credit, because PMI cancels at 80% of original value on request and automatically at 78%. FHA often wins in the 580 to 660 range because its pricing is less credit-sensitive, but its annual premium runs 11 years only at 90% LTV or below. Price both, and compare the menu in low-down-payment mortgages.

Is a 40-year mortgage a new mortgage product?

Usually it shows up as an existing loan stretched, not a new purchase program. VA, for example, lists a 40-year modification for borrowers having trouble making payments, in which the servicer extends the existing mortgage term to 40 years. That lowers the monthly payment and adds years of interest, so ask your servicer for both payment figures and the total interest before agreeing to it.

Is a home equity contract a mortgage?

Not in the providers’ own description, but it is secured like one. The CFPB’s Issue Spotlight on home equity contracts (January 15, 2025) says companies often claim the contracts are “not a loan,” have “no interest” and involve “no debt,” yet the company secures its interest with a lien on the property, just as lenders do for traditional mortgages. The CFPB adds that this lien can limit your ability to refinance your first mortgage or take on new debt.

How much is the VA funding fee?

Per the VA funding fee page, on a purchase it is 2.15% for first use with less than 5% down and 3.3% after first use, 1.5% with 5% or more down, and 1.25% with 10% or more, rates effective April 7, 2023. An IRRRL is 0.5%. Veterans receiving VA compensation for a service-connected disability are exempt. VA loans covers the rest of the costs.

Does a non-QM loan get less protection than a qualified mortgage?

The ability-to-repay rule still applies; what changes is the legal presumption. According to the CFPB, a lender must make a good-faith effort to determine that you can repay before lending, and when a loan is a Qualified Mortgage it is assumed the lender followed that rule. A non-QM loan carries no such assumption, so the lender’s review under 12 CFR 1026.43(c) of your income or assets, current debts and credit history has to stand on its own.

The bottom line on new mortgage products

Nearly every new mortgage product is one of five structures, and the useful question is never “is this new?” but “who wrote the terms, and can I read them?” Agency and government programs publish their rulebooks, and the 2026 conforming baseline of $832,750 marks roughly where that published pricing stops. Past it, the note and riders are your only rulebook. Check the Loan Estimate’s answers on prepayment penalty and balloon payment, confirm whether the loan is a qualified mortgage, and know which non-standard terms you’re accepting. Working through a broker gets the agency version priced beside the non-agency one.

If you’re ready to see which structure actually fits your file, talk to Align Lending. We’ll shop your scenario across our lender network and show you the numbers side by side. Call 248-506-5727 or start online.

Footnotes:

1. Align Lending is not acting on behalf of or at the direction of FHA or HUD. FHA program requirements are established and revised by the U.S. Department of Housing and Urban Development independently of conventional, VA and USDA guidelines. Return to text.

2. Align Lending works with VA-approved lenders and is not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency. Return to text.

3. Example figures in this article are hypothetical and for educational purposes only; they do not constitute an advertisement of credit terms or a rate quote under federal or state lending laws. The buydown illustration omits closing costs, mortgage insurance, escrows and any lender overlay, and assumes buydown funds are held in escrow and applied as payments come due. Your loan amount, rate and terms will depend on your application, your property and market conditions. Return to text.

Sources: 2026 baseline conforming loan limit value of $832,750 for one-unit properties, an increase of $26,250 and 3.26% over the 2025 value of $806,500, and a one-unit high-cost area ceiling of $1,249,125, Federal Housing Finance Agency news release, November 25, 2025. Loan Estimate “Loan Terms” disclosures of prepayment penalty and balloon payment, the definition of a balloon payment as a payment more than two times a regular periodic payment, and the product feature labels Negative Amortization, Interest Only, Step Payment, Balloon Payment and Seasonal Payment, 12 CFR § 1026.37(a)(10), (b)(4) and (b)(5). Delivery of the Loan Estimate no later than the third business day after the creditor receives the consumer’s application, 12 CFR § 1026.19(e)(1)(iii). Qualified mortgage product feature requirements (substantially equal periodic payments, no negative amortization, no deferral of principal, no balloon payment, term of 30 years or less), 12 CFR § 1026.43(e)(2). Points and fees limit of 3% of the total loan amount for loan amounts of $137,958 or more effective January 1, 2026, Consumer Financial Protection Bureau, Truth in Lending (Regulation Z) annual threshold adjustments. General qualified mortgage price-based thresholds for 2026 of an annual percentage rate less than 2.25 percentage points above the average prime offer rate on a first-lien transaction of $137,958 or more, 3.5 points for a first lien of $82,775 to $137,958 and 6.5 points for a first lien under $82,775, replacing the former 43% debt-to-income limit, Qualified Mortgage Definition Under the Truth in Lending Act (Regulation Z): General QM Loan Definition, 85 FR 86308 (December 29, 2020); 12 CFR § 1026.43(e)(2)(vi). Ability-to-repay determination and its scope exclusions for home equity lines of credit, reverse mortgages, timeshare interests, bridge loans of 12 months or less, construction phases of 12 months or less, housing finance agency credit, and certain forgiven or deferred subordinate liens, 12 CFR § 1026.43(a) and (c). Balloon-payment qualified mortgage exception for certain creditors operating in rural or underserved areas, 12 CFR § 1026.43(f). Prepayment penalty limits of 2% of the amount prepaid in the first two years, 1% in the third year and none after 36 months, available only on fixed-rate qualified mortgages that are not higher-priced, 12 CFR § 1026.43(g). High-cost mortgage coverage triggers of an APR more than 6.5 percentage points above the average prime offer rate on a first-lien transaction and total points and fees above 5% of the total loan amount for loans at or above the indexed threshold of $27,592 for 2026 (Truth in Lending (Regulation Z) Annual Threshold Adjustments, 90 FR 57890, December 15, 2025), and the prohibitions on balloon payments, negative amortization and prepayment penalties, 12 CFR § 1026.32(a)(1) and (d). Business-purpose exemption for credit extended to acquire, improve or maintain non-owner-occupied rental property, 12 CFR § 1026.3(a) and Official Interpretations. Special purpose credit programs permitted under Regulation B and the written-plan requirement for for-profit creditors, 12 CFR § 1002.8(a); bar on a for-profit program using race, color, national origin or sex as an eligibility factor, 12 CFR § 1002.8(b)(3), as amended at 91 FR 21668 (April 22, 2026). HomeReady and Home Possible 97% maximum LTV on a one-unit principal residence through automated underwriting and qualifying income limit of 80% of area median income, Fannie Mae Selling Guide B5-6-01 and B5-6-02; Freddie Mac Single-Family Seller/Servicer Guide Chapter 4501; Fannie Mae HomeReady and Freddie Mac Home Possible product pages. Temporary interest rate buydown maximum 3% rate reduction, 1% maximum annual increase, three-year maximum buydown period, qualification at the note rate, and treatment of interested-party funds, Fannie Mae Selling Guide B2-1.4-04, effective August 7, 2024. Interested party contribution maximums of 3% above 90% LTV/CLTV, 6% from 75.01% to 90% and 9% at 75% or below on a principal residence or second home, and 2% on investment property, Fannie Mae Selling Guide B3-4.1-02, effective May 7, 2025. Fannie Mae ARM plans indexed to the 30-day average SOFR, Fannie Mae Selling Guide B2-1.4-02. FHA minimum required investment of 3.5% of adjusted value at a 580 credit score and 90% maximum financing for scores of 500 to 579, HUD Handbook 4000.1. FHA upfront mortgage insurance premium of 1.75% and, for mortgage terms over 15 years, annual premiums of 55 basis points above 95% LTV and 50 basis points at or below 95% LTV on base loan amounts of $726,200 or less (75 and 70 basis points above that amount), with an 11-year duration at 90% LTV or below and the mortgage term above 90% LTV, HUD Mortgagee Letter 2023-05, February 22, 2023, effective for case numbers endorsed on or after March 20, 2023. Elimination of VA county loan limits for borrowers with full entitlement on loans closed on or after January 1, 2020, Blue Water Navy Vietnam Veterans Act of 2019, Public Law 116-23, amending 38 U.S.C. 3703; U.S. Department of Veterans Affairs. USDA Section 502 Guaranteed Loan Program 100% financing, household income limit of 115% of area median income and eligible rural area requirement, USDA Rural Development, 7 CFR part 3555. Private mortgage insurance cancellation at 80% of original value on borrower request and automatic termination at 78%, Homeowners Protection Act. MI Home Loan 640 minimum credit score and $566,355 statewide sales price limit effective June 1, 2026, MI 10K DPA maximum of $10,000 as an interest-free loan with no monthly payment, available statewide, required to be combined with a MSHDA MI Home Loan, with repayment deferred until payoff of the first mortgage, sale or refinance of the home, or the home ceasing to be owner-occupied, and the homebuyer education certificate requirement, Michigan State Housing Development Authority.

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Loan limits, agency guidelines, program rules and lender terms change and vary by county, property, program and investor; confirm current figures with the issuing agency and your loan documents, and consult a qualified professional about your situation. Figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Align Lending is an independent Michigan mortgage broker, NMLS #2041154.

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