Fannie DUS prices by tier on maximum LTV and minimum DSCR. Tier 2 is maximum 80% LTV and minimum 1.25x DSCR. Tier 3 is maximum 65% and minimum 1.35x. Tier 4 is maximum 55% and minimum 1.55x. DSCR figures are floors. Confirm the live grid on Form 4660. The tier-2 to tier-3 step typically saves 15 to 35 basis points and is the most negotiated dimension on agency execution.
How are the tiers defined?
Tier 2 is maximum 80% LTV and minimum 1.25x DSCR. Tier 3 is maximum 65% LTV and minimum 1.35x DSCR. Tier 4 is maximum 55% LTV and minimum 1.55x DSCR. DSCR figures are floors, not caps. There is no 75% / 1.30x tier and no Tier 1 at 80% / 1.25x. Confirm the live grid on Form 4660.
How can sponsors optimize?
Underwrite the tier-3 sizing scenario before locking. The proceeds reduction from tier 2 to tier 3 is often modest while the spread reduction is meaningful. Run both as parallel quotes and compute total cost of capital with the equity required to bridge the proceeds gap.
Sources
- Delegated Underwriting and Servicing (DUS) program disclosures · Fannie Mae · current