Selling Guide

Published December 16, 2020

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What are the DU tolerances for refinance transaction loan amount changes?

DU Tolerances for Refinance Transaction Loan Amount Changes

For refinance transactions, Fannie Mae allows the following tolerances to the loan amount:

  • The loan amount may increase $500 or up to 1% of the loan amount, whichever is less.
  • The loan amount may decrease 5% of the loan amount.

The loan amount tolerances are permitted provided the new LTV/CLTV does not result in

  • changes to the amount of required mortgage insurance coverage,
  • different loan-level price adjustments, or
  • changes to loan eligibility.

For example, if a loan casefile is submitted with a loan amount of $100,000 and the appraised value is $120,000 (which equals 83.3% LTV), the actual loan amount can go up to $100,500 (which equals 83.75% LTV) without requiring resubmission.

On the other hand, if the original loan amount was $108,000 (90% LTV), an increase without resubmission is not permitted because it would result in an LTV of 91%. The higher LTV requires different mortgage insurance coverage, and may result in the loan not being eligible for delivery.

The loan amount tolerance does not apply to Fannie Mae’s requirements regarding the amount of cash back to the borrower on a limited cash-out refinance transaction. (See B2-1.3-02, Limited Cash-Out Refinance Transactions.)

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