Fannie Mae and Ginnie Mae have both made mortgages more accessible, but they have a few key differences.
If you got a mortgage, Fannie Mae or Ginnie Mae likely played a role. Both organizations buy mortgages that banks originate and they sell mortgage-backed securities to investors. While both entities follow the same model, they have differences in who they serve, who owns them and other details. This guide will unveil the similarities and differences between Fannie Mae vs. Ginnie Mae.
What is Fannie Mae?
Fannie Mae, short for the Federal National Mortgage Association, was founded in 1938 under the National Housing Act. It is one of the main reasons mortgages are plentiful for real estate investors and aspiring homeowners. Matt Schwartz, a mortgage broker and the co-founder of Vet Home Search, summarizes how Fannie Mae works.
“Fannie Mae is a government-sponsored enterprise (GSE) that buys and guarantees mortgages from lenders, primarily those that conform to conventional loan standards. Its main purpose is to provide liquidity to the mortgage market by purchasing loans, bundling them into mortgage-backed securities (MBS) and selling them to investors, working to ensure lenders have the capital to keep originating new loans.”
The assurance Fannie Mae provides allows mortgage lenders to more confidently issue new mortgages. Reduced risk makes capital more accessible for home buyers. Fannie Mae is a publicly traded company that is owned by shareholders. It trades under the ticker symbol FNMA.
What is Ginnie Mae?
Ginnie Mae is a government-owned entity that assists with the financing of government-backed mortgages. It was founded in 1968. Schwartz explains how it works.
“Ginnie Mae is a government-owned corporation inside HUD and does not buy loans outright. It does, however, guarantee MBS backed by federally insured or guaranteed loans (i.e., FHA, VA or USDA).”
Federally backed loans are easier to obtain than conventional mortgages. Ginnie Mae loans have lower credit score requirements and higher debt-to-income ratio limits. Some of these loans also give you the option to put zero money down on your purchase.
Fannie Mae vs. Ginnie Mae
Fannie Mae and Ginnie Mae are both great options if you want to buy a home. Ginnie Mae’s financial products usually cater to people who have lower credit scores and higher debt-to-income ratios. For instance, if you have a 500 FICO score, you can still get an FHA loan with a 10% down payment.
Ginnie Mae loans are also better if you want to make a lower down payment, even if you do not have the best credit score. Some borrowers can buy homes with VA loans or USDA loans without putting any money down.
Fannie Mae loans are harder to get, but they usually have more competitive rates and terms, especially if you have a 700 credit score. Furthermore, you won’t have to worry about private mortgage insurance once you have more than 20% home equity. However, an FHA loan may come with mortgage insurance premiums for the life of the loan. Some people counter this by refinancing Ginnie Mae loans into Fannie Mae loans after their home equity exceeds 20%.
Fannie Mae loans also offer more flexibility in the types of properties you can buy and how much money you can borrow. You can use a Fannie Mae or a Ginnie Mae loan for any property in the U.S. that fits within the conforming limit. However, Ginnie Mae’s USDA loans limit you to properties within specific locations.
Both entities offer mortgages that have terms as long as 30 years and you can find plenty of options if you have to borrow more than $500,000 for your mortgage.
Differences Between Fannie Mae vs Ginnie Mae
Fannie Mae and Ginnie Mae serve different customers. While Fannie Mae primarily buys mortgages from large commercial banks, Ginnie Mae doesn’t directly purchase mortgages from any bank. Instead, Ginnie Mae offers government-backed guarantees on mortgage products from approved issuers.
Notably, Fannie Mae has a younger cousin in Freddie Mac. While Fannie Mae focuses on large banks, Freddie Mac targets smaller financial institutions like regional banks and credit unions.
These differences impact requirements around credit scores, debt-to-income ratios and other factors. Ginnie Mae loans are easier to get, but you will likely get a better deal with a Fannie Mae loan.
However, if there is a financial crisis, Ginnie Mae is guaranteed to be bailed out. This guarantee does not extend to Fannie Mae, since it is not a government-owned entity. However, the government swooped in and saved Fannie Mae back in 2008.
Similarities Between Fannie Mae vs Ginnie Mae
Both entities are critical for the mortgage industry. Fannie Mae and Ginnie Mae reduce risk for mortgage lenders and increase the number of available home loans. They both have several requirements for lenders that prevent them from going off the rails with credit score requirements and loan amounts. These two entities help banks with their risk management.
Why You Should Trust Us
Benzinga has been providing real estate insights for more than 15 years while regularly interviewing real estate experts for its articles. Furthermore, I am a certified personal finance counselor who has been writing about real estate for five years.
FAQ
What do Fannie Mae, Freddie Mac and Ginnie Mae all have in common?
Fannie Mae, Freddie Mac and Ginnie Mae all increase liquidity in the mortgage industry and make it easier for people to buy homes.
What is the purpose of Ginnie Mae?
Ginnie Mae’s purpose is to partner with lenders to offer government-backed mortgages. These mortgages have more generous requirements and make it easier for people to buy homes.
Why do banks sell mortgages to Fannie Mae?
Banks sell mortgages to Fannie Mae to reduce risk. That way, these financial institutions take less of a hit if some of the borrowers cannot repay their loans. Lenders can also make new loans with the money they receive from selling mortgages to Fannie Mae.
Sources
Schwartz, Matt. Personal interview with the author. 28 Apr. 2025.
Government-backed home loans and mortgage assistance. USA Gov. https://www.usa.gov/government-home-loans
About Marc Guberti
Marc Guberti is an investing writer passionate about helping people learn more about money management, investing and finance. He has more than 10 years of writing experience focused on finance and digital marketing. His work has been published in U.S. News & World Report, USA Today, InvestorPlace and other publications.
