 TITLE: How Do Fannie Mae and Freddie Mac Loans Work? CONTENT: Fannie Mae, or the Federal National Mortgage Association, buys conventional loans from big banks. Fannie Mae requires those banks to follow certain guidelines for lending money to homebuyers. These guidelines help ensure that Fannie Mae can sell these loans to investors. They include:\n*   Debt-to-income ratio up to 50%\n*   Credit score of at least 620\n*   Down payment of at least 3% of the home's purchase price—the 3% payment applies to HomeReady loans, geared to buyers who have low income or have limited cash for a down payment\n*   Private mortgage insurance (PMI) is typically required when down payment is less than 20% of home purchase price END