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1 Investment Property Guidelines Fannie Mae and Freddie Mac Checklist (This is for informational purposes only. For details and comprehensive information, refer to the applicable Fannie Mae Selling Guide & Lender Announcements or the Freddie Mac Seller/Servicer Guide) SPECIAL RULES Borrower Relationship Borrower cannot have affiliation with seller, builder, or developer # of Properties Borrower cannot have an interest in more than Fannie: 10 max 1- to 4-unit financed properties, includes primary residence and subject 5-10 financed properties have additional restrictions and requirements Freddie: 4 max 1- to 4-unit financed properties, includes primary residence and subject Owns More than 1 Investment Property Freddie: Only fixed rates or ARMs with initial fixed rates of 7 or 10 yrs. No A-minus Experience Managing Rentals Borrower must have 2 years experience managing rental properties, unless Entire PITI of subject is included in borrowers DTI Fannie: May be waived if condition not listed in DU findings Rent Loss Insurance Six months rent loss insurance required Freddie: Waived if entire debt of subject is used to qualify Fannie: DU will determine Financing Concessions Maximum 2%, regardless of LTV Temporary Buydowns No BORROWER QUALIFYING Income >From Subject Rental income from subject not considered as income for qualifying.

2 Use cash flow (next) or qualify without rental income using entire subject property debt Qualifying Ratios Housing ratio is always borrower s primary residence If DTI includes cash flow (1) Cash flow from Operating Income Statement (Form 216/998); or (2) Cash flow from tax returns, if property owned full tax year (216/998 not required) (3) Net negative cash flow, include in DTI; net positive cash flow, include as income (4) Freddie: Requires PITI plus operating expenses Reserves Six months PITI in reserves required (1) Only 2 months reserves if property is DU and 1- unit (2) Cumulative, add all properties currently being financed/refinanced Manually Underwritten loans Freddie: if > 75% LTV, 720 minimum indicator score 1- unit only Fannie: Representative score per chart below Freddie: No BK, foreclosure, deed-in-lieu, in 7 years unless extenuating circumstances then 2 yrs for BK and 3 yrs for Foreclosure or DIL Minimum credit score, dependant upon program and LTV Gift funds No gifts or grants, all funds necessary from own money PROPERTY & APPRAISAL Condominiums If the property is a condo Freddie: No Streamlined Review, 51% occupancy, full warranties always apply Fannie.

3 No Limited Review except detached with CLTV 75% Manufactured Housing No Additional Appraisal Forms Copyright 2010 1 Form 998/216 Operating Income statement unless entire debt from subject is included in DTI, or tax returns used to calculate cash flow Form 1007, Single Family Comparable Rent Schedule for 1- unit properties LTV, PROGRAMS & PRICING Fees Standard product, from to , cumulative with all other fees LTV Depend on product, # of units, and transaction type. For standard product Loan Purpose # of Units LTV/CLTV Min. FICO- Fannie Manual Underwrite Investment Properties, Standard Product (FICO for Fannie Manual Underwrite Only) 1 units 85/85/85 LTV > 75%: 680 LTV 75%: 620 Purchase 2-4 units 75/75/75 660 1 units 75/75/75 640 Limited Refi 2-4 units 75/75/75 680 1units 75/75/75 700 Cash-Out 2-4 units 70/70/70 680 Products Limited products available, availability, fees, LTVs and minimum credit score vary with product Copyright 2010 2