What are Fannie Mae and Freddie Mac?

The Differences Between Fannie vs. Freddie, Explained

Fannie Mae and Freddie Mac are government-sponsored enterprises (GSE) whose missions are to help support homeownership and rental housing in the United States. Fannie and Freddie do this by ensuring there is “liquidity” in the housing market—which means that lenders have enough money to issue home loans, at reasonable rates, to people who desire and qualify for mortgages.

How Do Fannie Mae and Freddie Mac Work?

Fannie Mae and Freddie Mac are not mortgage lenders, and they do not lend money to people to buy or refinance homes. Instead, Fannie and Freddie buy mortgages from lenders which they then turn into mortgage-back securities and sell to investors. (This is sometimes called the "secondary mortgage market.") By buying mortgages, Fannie Mae and Freddie Mac help lenders get the money they need to offer more mortgages to more customers.

What Is Fannie Mae?

Fannie Mae is a nickname for the Federal National Mortgage Association (FNMA), which was chartered by Congress in 1938 to be a source of affordable financing. Fannie buys 30-year, fixed Conventional loans for single-family homes. Fannie also supports financing for multi-family homes.

The name "Fannie Mae mortgages" generally refers to Conventional loans that meet the credit, income, and financial standards that make them eligible to be purchased by Fannie Mae. These mortgages can also be called "conforming loans."

What Is Freddie Mac?

Freddie Mac is a nickname for the Federal Home Loan Mortgage Corporation (FHLMC), which was chartered by Congress in 1970 to be an additional source of affordable financing. Like Fannie Mae, Freddie Mac focuses on buying mortgages for single-family homes that conform to its credit, income, and financial standards while also supporting financing for multi-family homes. There are some differences in the standards that Fannie and Freddie use to decide which mortgages are eligible for purchase, too.

What Is Ginnie Mae?

Ginnie Mae is a wholly owned government corporation that supports financing for mortgages guaranteed by agencies of the federal government, such as VA loans and FHA loans. Ginnie Mae does this by buying mortgages, which it sells on the secondary mortgage market to investors—similar to the way Fannie Mae and Freddie Mac operate.

Ginnie Mae is the nickname of the Government National Mortgage Association (GNMA), which was created in 1968 when Fannie Mae was divided into two organizations. At that time, Fannie Mae turned its focus to purchasing Conventional loans, and Ginnie Mae was created to purchase government-backed mortgages. Ginnie Mae’s parent agency is the U.S. Department of Housing and Urban Development (HUD).

Last reviewed and updated June 2024 by Freedom Mortgage.