What Mortgage & Real Estate Professionals Need to Know About the New Fannie & Freddie Insurance Changes (2026)
On March 18, 2026, Fannie Mae and Freddie Mac announced an important update to property insurance requirements for federally-backed mortgages—and it’s one that could directly impact your borrowers, closings, and long-term client satisfaction.
The Big Change: Roof Coverage Flexibility
Historically, homeowners insurance policies for Fannie Mae and Freddie Mac loans required Replacement Cost Coverage on roofs. As of March 2026 that has now changed.
Replacement Cost is no longer required for roof coverage
Actual Cash Value (ACV) coverage is now acceptable
This is a significant shift—and one that creates both opportunities and risks.
What is ACV Coverage (and Why It Matters)?
ACV (Actual Cash Value) means that in the event of a claim, the insurance company pays for the depreciated value of the roof, not the full replacement cost.
The primary driver behind this update is affordability.
Insurance carriers have been tightening underwriting guidelines, especially on older roofs. This has led to higher premiums, fewer carriers options and difficulty placing coverage on certain homes. By allowing ACV coverage, Fannie Mae and Freddie Mac are Expanding insurability for older homes, Helping borrowers qualify more easily and Reducing upfront insurance costs.
How This Impacts You as a Mortgage or Real Estate Professional
This change gives you more flexibility—but also introduces new conversations you should be having with borrowers. This change allows for easier closings on older homes and homes with aging roofs. Homeowners insurance policies with ACV roof coverage often times have lower premiums. This reduces mortgage payments and helps more clients with debt-to-income ration issues to qualify for mortgage loans.
Increased Risk for Borrowers
This sounds great but here’s the trade-off—and it’s important. Borrowers may not fully understand that they are not fully covered for roof replacement and a major claim could result in significant out-of-pocket costs. This creates a potential post-closing surprise if not properly explained.
Where the Right Insurance Partner Matters
This is where strong communication between mortgage professionals, Realtors and insurance advisors becomes critical. At Bragg Insurance Agency, we’re helping clients navigate this change by:
Clearly explaining the difference between ACV and Replacement Cost
Offering both options when available
Helping borrowers make informed decisions—not just cheaper ones
Structuring policies that align with both loan requirements and long-term protection
We’re also seeing carriers offer structured solutions such as Roofing Materials Payment Schedules (RMPS), which provide a balanced, cost-sharing approach between full replacement and strict ACV coverage.
This update from Fannie Mae and Freddie Mac is a meaningful shift in the market. It creates more flexibility, more affordability, but also more responsibility in educating clients. Mortgage professionals and Realtors who proactively address this with their borrowers will build more trust, reduce surprises after closing, strengthen long-term referral relationships
If you have a deal involving an older roof, Insurance placement challenges or a borrower looking to reduce costs
We’d be happy to review the situation and provide clear, fast guidance.
At Bragg Insurance Agency, we don’t just help policies get issued—we help your loans close cleanly and your clients stay protected long after the closing table.
👉 Reach out anytime to discuss a file or scenario—we’re here to help.
