What Is the Difference Between Fannie Mae and Freddie Mac?

4 Min Read
Published Oct. 13, 2023
Lenders meet in a bright conference room to discuss selling loans to Fannie Mae and Freddie Mac.
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If you’re taking out a mortgage to buy a home, then you may have heard mention of Fannie Mae and Freddie Mac. While they may sound like an old-fashioned married couple, Fannie Mae and Freddie Mac aren’t people. They are government-sponsored enterprises that buy mortgages to get them off lenders’ books. By reducing the risk that lenders take on, Fannie Mae and Freddie Mac help more homebuyers afford a mortgage to buy a home.

Here’s a closer look at what Fannie Mae and Freddie Mac have in common, as well as what sets them apart from each other.

Similarities Between Fannie Mae and Freddie Mac

Both Fannie Mae and Freddie Mac buy home loans from mortgage lenders that they package and sell in secondary markets. Taking these loans off lenders’ books frees up room in their budgets to make more loans. This helps reduce the cost of home loans for consumers.

Fannie Mae and Freddie Mac also help ensure that there’s enough money available in the mortgage market to meet the demand for loans. They help make the secondary mortgage market more liquid, which helps lower interest rates on home loans.

When it comes to eligibility criteria for the home loans they buy, Fannie Mae and Freddie Mac use the conforming loan requirements set by the Federal Housing Finance Agency, which include:

  • Maximum loan amount: In 2023, there is a $726,200 baseline maximum for a single-family home loan. The maximum is $1,089,300 in designated high-cost areas.
  • Minimum credit score: 620 for most loans; 640 for manually underwritten adjustable-rate mortgages.
  • Minimum down payment: 3%.
  • Maximum debt-to-income ratio: No higher than 50%.

How Fannie Mae and Freddie Mac Are Different

While Fannie Mae and Freddie Mac are similar in concept, they operate in different ways. Here’s a rundown of the important differences between Fannie and Freddie.

Mortgage sourcing

Fannie Mae typically buys loans from larger, national commercial banks, while Freddie Mac buys loans from smaller community banks. So, the type of lender you use may affect which one buys your loan.

Intended purpose

Fannie Mae and Freddie Mac were created for different reasons. Fannie Mae was created by Congress after the Great Depression to make affordable housing more available, and to make funding more accessible. Freddie Mac was created later to compete with Fannie Mae, and to expand the secondary mortgage market.

Approval guidelines

Fannie Mae and Freddie Mac use slightly different guidelines for assessing a borrower’s ability to afford a mortgage. This can include different guidelines regarding a borrower’s income, debt, and credit score.

Lending requirements

Fannie Mae and Freddie Mac have different lending requirements on the mortgage programs they offer. For example, the loan programs offered by Fannie Mae might have a different minimum down payment requirement compared with loan programs offered by Freddie Mac.

Loan programs

Fannie and Freddie offer different loan programs:

Fannie Mae and Freddie Mac Loan Options

Fannie MaeFreddie Mac
— HomeReady.
— 97% Loan-to-Value Standard.
— HFA Preferred.
— HomeStyle.
— HUD-184.
— Conforming loans.
— RefiNow.
— Home Possible.
— GreenCHOICE.
— Affordable Seconds.
— HomeOne.
— HeritageOne.
— Conforming loans.
— Super Conforming Mortgages.
— Construction Conversation.
— Refi Possible.
— Manufactured homes.


Here are answers to some common questions about Fannie Mae and Freddie Mac.


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