Pledged Asset Mortgage

Mortgage Products

Fixed

ARM

Reverse

Pledge Investments to Finance a Home Purchase

This mortgage lets you borrow up to 100 percent of the sales price (or appraised value, if less) of a home when there is a pledge of a stable financial asset. Pledged-Asset mortgages are specially designed for borrowers who have sufficient income to make monthly payments toward a home, but who have not saved the necessary down payment. The built-in safety of the pledged asset lets the borrower finance a home with a minimum investment of 5 percent (in down payment or closing costs).

Key Features

Pledged-Asset mortgages allow borrowers to capitalize on savings without spending them.
First mortgages with LTVs up to 100 percent are acceptable (so long as a 5 percent borrower contribution is made to closing costs).
Terms can be for 10-, 15-, 20-, and 30-year fixed-rate, fully amortizing mortgages. (Adjustable-rate mortgages are available only when the pledged asset is at least 10 percent and the borrower is making a contribution of at least 5 percent.)
Only one-unit, owner-occupied, primary residences are eligible.
The pledge may only be given by a parent, grandparent, brother, or sister eligible under the Fannie Mae gift policy or, in the case of the self-pledge, by the borrower. The pledge must be held as a certificate of deposit at a bank, credit union, or other depository.

The Pledged-Asset Mortgage allows borrowers to finance a home without liquidating investments to fund a down payment. Assets that are pledged in lieu of a down payment can come from a borrower's own investment funds or from those of a family member.

Consumer Benefits

Borrower does not need to liquidate earning assets for a down payment
Provides the borrower the maximum return on investment and the maximum allowable home interest deduction

2006 Conforming Loan Limits

Number of
Units Maximum original
principal balance Alaska, Guam, Hawaii,
and U.S. Virgin Islands only

1 $417,000 $625,500

2 $533,850 $800,775

3 $645,300 $967,950

4 $801,950 $1,202,925

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