Fannie Mae makes money primarily by charging guarantee fees on the mortgage-backed securities it stands behind, and in 2024 that model produced $29.1 billion in revenue on roughly $4.1 trillion in guaranteed home loans.1Fannie Mae. Fannie Mae Reports Net Income of 17.0 Billion for 2024 The company is a government-sponsored enterprise, not a federal agency. It buys mortgages from banks, pools them into securities, sells those securities to investors, and promises investors the payments will keep arriving even when individual borrowers default.2USAGov. Fannie Mae Investors pay for that promise. Everything else Fannie Mae earns — interest on loans it keeps, upfront risk-based fees, apartment lending, capital markets activity — sits behind guarantee fees in the revenue mix.
Guarantee Fees Do Most of the Work
Once Fannie Mae buys a batch of mortgages, it pools them and creates a mortgage-backed security. Investors receive monthly principal and interest payments as homeowners pay their mortgages, and Fannie Mae guarantees those payments arrive on schedule even if borrowers stop paying.3Fannie Mae. Basics of Fannie Mae Single-Family MBS
That guarantee is what generates the ongoing fee. It’s expressed as an annual percentage of the outstanding loan balance and often called a g-fee. In 2024, the average g-fee on new single-family loan acquisitions was 65 basis points, or 0.65 percent of the loan amount per year.4Federal Housing Finance Agency. Fannie Mae and Freddie Mac Single-Family Guarantee Fees in 2024 On a $400,000 mortgage, that’s roughly $2,600 a year. Borrowers don’t write a separate check. Lenders build the fee into the mortgage interest rate, so you pay it indirectly as part of your monthly payment.5Federal Housing Finance Agency. Fannie Mae and Freddie Mac Guarantee Fees History
The scale is enormous. Fannie Mae’s single-family guarantee book stood at $3.6 trillion in 2024 and generated $24.4 billion in revenue at an average charged fee of 47.6 basis points across the whole book.1Fannie Mae. Fannie Mae Reports Net Income of 17.0 Billion for 2024 The gap between 47.6 basis points on the book and 65 basis points on new loans reflects older, lower-priced loans still in the portfolio. As those roll off, the average fee has been drifting up.
The Federal Housing Finance Agency, Fannie Mae’s regulator since the Housing and Economic Recovery Act of 2008, oversees g-fee pricing to balance borrower affordability against Fannie Mae’s need to build capital and cover credit losses.6Federal Housing Finance Agency. Fannie Mae and Freddie Mac
Loan-Level Price Adjustments
Alongside the ongoing g-fee, Fannie Mae charges upfront fees called loan-level price adjustments, or LLPAs. These are one-time charges assessed when the lender sells the loan, and they’re priced to the loan’s risk profile. Credit score and loan-to-value ratio drive most of the adjustment.7Fannie Mae. Loan-Level Price Adjustment Matrix
A borrower with a 780 credit score putting 25 percent down on a purchase pays no LLPA at all. A borrower with a 660 score putting 5 percent down pays 1.25 percent of the loan amount, or $5,000 on a $400,000 loan. Cash-out refinances face steeper fees: a 680 score at 75 percent loan-to-value carries a 3.75 percent adjustment.7Fannie Mae. Loan-Level Price Adjustment Matrix Borrowers rarely pay these out of pocket. Lenders typically roll the LLPA into a slightly higher rate, spreading the cost across the life of the loan.
LLPAs are waived entirely for several categories, including loans through Fannie Mae’s HomeReady affordable lending program, first-time homebuyers earning no more than the area median income (or 120 percent in high-cost areas), and loans on manufactured homes, rural properties in high-need areas, and certain energy-efficient housing.7Fannie Mae. Loan-Level Price Adjustment Matrix
Interest Income From the Retained Portfolio
Not every loan gets securitized. Fannie Mae keeps a portfolio of mortgage assets on its own balance sheet and earns interest on them. As of September 2025, this retained portfolio was valued at roughly $100.5 billion.8Fannie Mae. Monthly Summary Presentation September 2025
The profit here is the spread between what borrowers pay on their mortgages and what Fannie Mae pays on the debt it issues to fund those purchases. Fannie Mae funds the retained portfolio by issuing agency debt securities across a range of maturities.9Fannie Mae. Debt Securities Because investors view that debt as carrying an implicit government backing, funding costs run below mortgage rates, and the difference is margin.
This portfolio has been shrinking by design. Under Fannie Mae’s agreement with the U.S. Treasury, the company has been required to reduce its retained holdings to lower systemic risk.10Fannie Mae. Whole Loan Sales It’s now a fraction of its pre-2008 peak, which is one reason guarantee fees have grown even more dominant in the revenue mix.
Multifamily Lending
Fannie Mae doesn’t only back single-family homes. Its multifamily business finances apartment buildings and other rental housing through a model called Delegated Underwriting and Servicing. Approved lender-servicers originate and underwrite apartment loans, Fannie Mae securitizes them into multifamily MBS with the same kind of guarantee, and the lender retains a share of the credit risk.11Fannie Mae Multifamily. Delegated Underwriting and Servicing – The Role of Risk Retention in Multifamily Finance
Guarantee fees are the primary revenue source here too. In 2024, the multifamily book was $499.7 billion with an average charged fee of 74.4 basis points, producing $4.7 billion in revenue.1Fannie Mae. Fannie Mae Reports Net Income of 17.0 Billion for 2024 That’s higher than the single-family average, reflecting different risk characteristics and individually negotiated pricing on apartment loans. By the end of 2025, the multifamily book had grown to $534.7 billion, and full-year 2025 new business volume reached $73.7 billion.12Fannie Mae. 4Q and Full-Year 2025 Multifamily Earnings Highlights
Capital Markets and Smaller Streams
Fannie Mae’s capital markets operation covers several activities that fall outside the guarantee-fee and portfolio-interest buckets. One is whole loan sales. When Fannie Mae holds non-performing or re-performing loans that don’t belong in a standard MBS pool, it sells them to qualified investors, nonprofits, or public-sector organizations through competitive bidding.10Fannie Mae. Whole Loan Sales The group also uses derivatives to hedge interest rate movements. Gains and losses on those hedges flow through earnings and can swing meaningfully quarter to quarter. Transaction fees from MBS issuance and settlement add a modest stream.
One revenue source is worth flagging because it no longer exists. Fannie Mae used to charge lenders a per-loan fee for its Desktop Underwriter automated underwriting system, but in 2015 it eliminated that fee to encourage wider adoption.13Fannie Mae. Fannie Mae Eliminates Desktop Underwriter Fee and Further Enhances Its Industry Leading Tools More lenders using the tool means more loans in the securitization pipeline, which pays back many times over through g-fees.
Where the Profits Go
Fannie Mae has been under federal conservatorship since September 2008, managed by the FHFA.14Federal Housing Finance Agency. FHFA Home During the financial crisis, the U.S. Treasury injected $119.8 billion into Fannie Mae and received senior preferred stock in return. For years, a “net worth sweep” sent essentially all of Fannie Mae’s profits to the Treasury each quarter, leaving no room to build capital.
In January 2021, Treasury and FHFA amended the agreement to let Fannie Mae retain earnings instead of sweeping them. The company can now accumulate capital until it meets the regulatory minimums in FHFA’s Enterprise Capital Framework. In exchange, the liquidation preference on Treasury’s senior preferred stock rises by the amount of retained capital. Once Fannie Mae hits its capital target, it will resume paying quarterly dividends to Treasury equal to the lesser of 10 percent of the liquidation preference or the prior quarter’s increase in net worth.15U.S. Department of the Treasury. Treasury Department and FHFA Amend Terms of Preferred Stock Purchase Agreements for Fannie Mae and Freddie Mac
Leaving conservatorship requires resolving all material conservatorship-related litigation and holding common equity tier 1 capital of at least 3 percent of total assets.15U.S. Department of the Treasury. Treasury Department and FHFA Amend Terms of Preferred Stock Purchase Agreements for Fannie Mae and Freddie Mac With over $4 trillion in MBS outstanding as of December 2025, that 3 percent threshold works out to well over $100 billion in required capital.16Fannie Mae. Monthly Summary Presentation December 2025 At the current pace of roughly $17 billion in annual net income, reaching that level will take years.
The core transaction repeats millions of times: buy a mortgage, wrap it in a guarantee, sell it to investors, collect a fee for standing behind the payments. In 2024, that produced $29.1 billion in revenue and $17.0 billion in net income.17Fannie Mae. Fourth Quarter and Full-Year 2024 Financial Results Guarantee fees on single-family and multifamily loans account for the overwhelming majority. Everything else fills in the margins, and every dollar of it traces back to homeowners and renters making their monthly payments.