Fannie Mae, Freddie Mac and USDA Updates, Nov. 13, 2026
Guidelines current as of . Agencies update their rules, so check the latest guide before you rely on this post.
The change most likely to show up in your pipeline this month: Freddie Mac now treats a refinance that buys out a co-owner as a no cash-out refinance, effective immediately as of its November 4 bulletin. That's the ex-spouse, the sibling who co-inherited the house, the friend who co-signed and wants off the title. Their buyout now follows no cash-out rules instead of cash-out ones.
It wasn't the only news. Fannie Mae and Freddie Mac both opened VantageScore 4.0 to manually underwritten loans, Fannie Mae made room for ADUs in condo projects, and USDA published two final rules, one of which is already in effect. Let's break it down.
At a glance
| Agency | Announcement | The change | Effective |
|---|---|---|---|
| Fannie Mae | SEL-2026-10 | ADUs allowed in eligible condo projects | Immediately |
| Fannie Mae | SEL-2026-10 | Occupancy wording aligned with the security instruments | Immediately |
| Fannie Mae | SEL-2026-10 | Community Seconds rules and checklist clarified | Immediately |
| Fannie Mae | SEL-2026-10 | VantageScore 4.0 for manual underwriting and DU 12.1 | Guide topics dated Nov. 4, 2026 |
| Fannie Mae | SEL-2026-10 | Premium recapture on whole loans paid off within 120 days | Immediately |
| Fannie Mae | LL-2026-09 | New manual underwriting credit score and reserve matrix | Loans delivered on or after Feb. 22, 2027 |
| Freddie Mac | Bulletin 2026-15 | Co-owner buyouts become no cash-out "equity buyout" refinances | Immediately |
| Freddie Mac | Bulletin 2026-15 | Rental income documentation and ADU zoning | Immediately |
| Freddie Mac | Bulletin 2026-15 | VantageScore 4.0 for manual underwriting, no Alt FICO Credit Fee | Immediately |
| Freddie Mac | Bulletin 2026-15 | Third-party asset verification reports | Immediately |
| USDA | FR Doc 2026-22772 | Real estate commissions excluded from the 6% seller concession limit | Nov. 9, 2026 |
| USDA | FR Doc 2026-22038 | Homes with income-producing ADUs and home-business features eligible | Dec. 28, 2026 |
FHA and VA had nothing new for originations in this stretch. VA's latest circular covers partial claim payments for servicers, and HUD's latest FHA notice is a reminder about office hours for the new credit score models.
One rule for everything below: a lender can keep stricter rules than the agency, called overlays. Check your own lender's guidelines before you promise a borrower any of these.
Fannie Mae
All five of the first changes come from Selling Guide Announcement SEL-2026-10, published November 4, 2026.
ADUs in condo projects (SEL-2026-10)
An ADU, or accessory dwelling unit, is a small second home on the same property. Think granny flat, garage apartment, or the backyard cottage your borrower's in-laws have opinions about.
Fannie Mae is "expanding property eligibility criteria to allow Accessory Dwelling Units (ADUs) in eligible condo projects." The Guide changed in two places: B2-3-04, Special Property Eligibility Considerations, and B4-2.1-03, Ineligible Projects. In Fannie Mae's words, "Lenders may take advantage of this update immediately."
What to do differently: a condo buyer whose unit or project has an ADU is no longer an automatic pass. The project still has to be eligible, so run the project review the way you always do.
Occupancy wording (SEL-2026-10)
This one isn't a new rule. Fannie Mae "clarified existing policy by aligning the occupancy classification language in the Selling Guide to the occupancy language in the security instruments," in B2-1.1-01, Occupancy Types. The security instrument is the mortgage or deed of trust your borrower signs at closing, and it's where they promise how they'll live in the home.
Why bother? Because the Guide and the closing documents now say the same thing, so there's one definition of a principal residence or a second home to hold the file to. Set occupancy on the application the way your borrower will sign it at the closing table. The clarification applies immediately.
Community Seconds (SEL-2026-10)
A Community Second is a second mortgage from a housing agency, nonprofit, or employer that helps with the down payment or closing costs. Fannie Mae "clarified eligibility requirements for Community Seconds providers and lender responsibilities for reviewing Community Seconds programs and refined the Community Seconds Checklist." The changes cover B3-4.3-06, B5-5.1-01, and B5-5.1-02, and they apply immediately.
If you use down payment assistance, pull the new checklist before your next file, not after the underwriter sends it back.
VantageScore 4.0 on manual loans (SEL-2026-10)
VantageScore 4.0 is a credit score model, and the alternative to Classic FICO. Fannie Mae folded Lender Letter LL-2026-06, "VantageScore 4.0 Broad Lender Availability," into the Guide, and then went further: "we have extended use of VantageScore 4.0 to manually underwritten loans as well as loan casefiles underwritten through DU Version 12.1." The updated B3-5.1-01 is dated November 4, 2026.
For you, that means a borrower whose VantageScore is in better shape than their FICO now has a path on a manual file too, not just through DU.
Premium recapture on early payoffs (SEL-2026-10)
This one lives on the lender's side of the table. Fannie Mae updated C1-1-01, Execution Options: "for any whole loan that pays off within 120 days from the purchase date and had a net negative LLPA (including national and loan-specific adjustments), the required reimbursement to Fannie Mae will be the negative LLPA plus a 50 basis points processing fee." It's effective immediately.
An LLPA, or loan-level price adjustment, is the price Fannie Mae adds or credits based on a loan's risk. Your borrower doesn't pay this one. But lenders hate giving money back, so don't be surprised if your secondary desk gets fussier about a borrower who plans to refinance again in four months.
A new manual underwriting matrix (LL-2026-09)
Lender Letter LL-2026-09, also from November 4, rebuilds the Eligibility Matrix for manually underwritten loans. It does four things:
- "For manually underwritten loans, references to credit scores include both Classic FICO and VantageScore 4.0. The same minimum credit score requirements apply to both models."
- "Aligning minimum credit score requirements for fixed-rate and adjustable-rate loans."
- "Establishing consistent credit score and reserve requirements for two- to four-unit principal residence transactions and for cash-out refinance transactions."
- "Combining all manual underwriting requirements, including HomeReady and HomeStyle, in a single matrix." HomeReady and HomeStyle Renovation loans "continue to be eligible for manual underwriting only for purchase and limited cash-out refinance (LCOR) transactions."
Here's the catch. The new matrix applies to "loans delivered to us on or after Feb. 22, 2027." Delivery is the day your lender sells the loan to Fannie Mae, which comes after closing. A manual file you take in December could land under the new matrix, so check the new minimums for two- to four-unit and cash-out files before you quote eligibility.
Freddie Mac
Everything here comes from Bulletin 2026-15, dated November 4, 2026, and every change below is effective immediately.
Co-owner buyouts are now no cash-out refinances (Bulletin 2026-15)
Picture two people who own a house together. One wants out. The other refinances to pay them off.
Freddie Mac used to call that a special purpose cash-out refinance. Now: "Special purpose cash-out refinance Mortgages, used to buy out the equity of a co-owner, have been reclassified from cash-out to 'no cash-out' transactions and renamed equity buyout refinance Mortgages." The rules moved from Guide Section 4301.6 to 4301.4.
What changed with it:
- The loan gets the loan-to-value ratios, underwriting requirements, and affordable programs available for no cash-out refinances.
- The proceeds must first buy out the co-owner, and then they can go to anything else a no cash-out refinance allows.
- The 12-month joint ownership requirement stays, and the lender now keeps the documents that support it.
- Freddie Mac "removed prior joint occupancy requirement for Borrower and co-owner." The co-owner doesn't have to have lived there.
So, what does this mean for you? A divorce buyout or an inheritance split now gets the loan-to-value ratios and programs of a no cash-out refinance, and the co-owner who moved out years ago no longer sinks the deal. Call the borrowers you told "not yet."
Rental income documentation and ADU zoning (Bulletin 2026-15)
Freddie Mac reorganized Section 5306.1 and changed a few appraisal rules for rental income:
- "For a non-subject property, the appraisal report is not required to be a UAD 3.6 appraisal report." The same goes for a departure residence, the home your borrower is turning into a rental.
- "For a subject 2- to 4-unit Primary Residence, a UAD 3.6 Traditional Appraisal Report is required."
- When rental income isn't used to qualify on a subject two- to four-unit primary residence or investment property, and the appraisal doesn't show the rent, the lender can deliver the estimated rent from "A written statement from the Borrower, or" the monthly income in Section 3a of the loan application.
Freddie Mac also owned up to an oops. During an earlier Guide rewrite, "we inadvertently removed the requirements for ADU zoning compliance when using rental income from an ADU." They're back. If you use ADU rent to qualify, the ADU has to meet zoning.
VantageScore 4.0 on manual loans (Bulletin 2026-15)
Same idea as Fannie Mae's. Freddie Mac now allows "Sellers to use VantageScore 4.0 Credit Scores to meet Guide requirements for Manually Underwritten Mortgages," and it "updated Exhibit 19 to eliminate the Alt FICO® Credit Fee in Price." One less line item. Nobody will miss it.
Third-party asset verification (Bulletin 2026-15)
Freddie Mac "updated the asset documentation requirements to permit third-party verification reports for depository accounts, securities and retirement accounts, including when using accumulated assets as income." The changes are in Sections 5307.1 and 5501.3.
Translation: a report from a verification service can stand in where you'd otherwise be chasing your borrower for the missing page 7 of 8.
USDA
Commissions don't count against the 6% concession limit (FR Doc 2026-22772)
A seller concession is money the seller, or another interested party like a builder, puts toward the buyer's costs. USDA caps it at 6% of the sales price.
USDA's final rule keeps the cap and adds one sentence to the definition: "Real estate commission fees are excluded from the 6 percent seller concession limitation." It took effect November 9, 2026.
USDA calls this a clarification, "aligning the policy with prevailing mortgage industry standards." Clarification or not, it's now in writing: when the seller pays the buyer's agent, that payment doesn't eat into the 6%. In USDA's words, it "allows sellers to contribute more toward borrower closing costs, necessary repairs, or other permissible transaction expenses." Recheck the concession math on pending USDA files and on contracts being written now.
Homes with ADUs and home businesses (FR Doc 2026-22038)
USDA used to keep its guaranteed loans away from property that earns income. Its final rule changes three of those restrictions:
- The ban on income-producing land or buildings "shall not apply when loan funds are used for the financing of an otherwise qualifying property which contains, or will contain, a single or multiple accessory dwelling units."
- The ban on buildings designed for a business doesn't apply to a home "with design features which accommodate a home-based business or businesses; such as childcare, product sales, or craft production; which do not require specific commercial real estate features."
- The site rule against income-producing buildings gets the same ADU exception.
The rule also defines an ADU as "a habitable living unit located within or detached from a single family dwelling, subordinate in size, has means of separate ingress and egress meeting the minimum requirements for a living unit."
Here's the deal, though. USDA "determined potential income from an ADU falls into this category and will not include it in income calculations." Your borrower can buy the house with the rentable cottage. They can't count the cottage's rent to qualify for it. Run their own income through the debt-to-income calculator to see the largest payment USDA allows.
The rule takes effect December 28, 2026, and USDA's lender notice says "the related revisions to Handbook 1-3555 will take effect on December 28, 2026." Until then, the old restrictions apply.
What to do this week
- Go back through your "not yet" list for co-owner buyouts on Freddie Mac loans.
- On USDA purchases, take the agent's commission out of the 6% concession math.
- On manual files that will deliver after February 22, 2027, check Fannie Mae's new matrix before you quote.
Three agencies, a dozen changes, and only one of them says "Feb. 22, 2027" in the fine print. See you next week, when we find out what they've been up to. 📋