Federal National Mortgage Association (Fannie Mae)

A government-sponsored corporation that buys and sells loans in the secondary market

Fannie Mae buys loans from lenders and sells them to investors, the government and other lenders. This allows lenders to have a steady flow of money so that they can offer more loans to customers who want to buy homes.

Fannie Mae only buys loans that conform to their strict borrowing guidelines. Fannie Mae also offers a special first time buyer program, which only requires a 3% down payment, to encourage people who don’t make a lot of money to buy homes.