Pledged-Asset Mortgage

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.