Personal Investors

Government National Mortgage Association bonds

Please note: Vanguard no longer offers the purchase of GNMA bonds. If you currently own GNMA bonds, Vanguard can sell them for you.

The Government National Mortgage Association (GNMA or Ginnie Mae) issues agency bonds backed by the full faith and credit of the U.S. government. GNMA guarantees principal and interest on mortgage-backed securities (MBS) backed by loans insured by the Federal Housing Administration and the Department of Veterans Affairs. New GNMAs are issued in $25,000 minimum denominations.

MBS are an investment in a pool of mortgage loans, which are the underlying asset and provide cash flow for the securities. MBS are commonly referred to as "pass-through" securities, as the principal and interest of the underlying mortgage loans "passes through" to the investor. All bondholders receive a monthly pro-rata distribution of principal and interest over the life of the security. MBS are issued with maturities of up to 30 years, though most mature earlier. 

Each MBS has an “average life,” an estimate of the time remaining until the final principal payment. Average life will vary based on changes in principal payments, which are driven by interest rates and the speed by which mortgage holders prepay their loans.

Credit rating

  • GNMA securities, like U.S. Treasuries, are guaranteed and backed by the full faith and credit of the U.S. government and generally are considered to be of the highest credit quality.


  • The interest income on GNMAs generally is subject to federal and state taxes.
  • GNMA securities may subject investors to capital gains taxes when sold or redeemed.  Investors should consult a tax professional for additional information.


  • Vanguard Brokerage Services ® does not make a market in GNMA bonds. If you want to sell your GNMAs prior to maturity, Vanguard Brokerage can provide access to a secondary over-the-counter market. The secondary market generally provides liquidity for GNMA bonds, but liquidity will vary depending on a bond’s features, lot size, and other market conditions. It may be difficult to sell GNMAs that have experienced significant principal pay-down.


  • Vanguard Brokerage charges a commission for GNMA transactions in the primary and secondary markets.


  • GNMA prices can rise or fall depending on interest rates. If interest rates rise, the market price of outstanding GNMA bonds generally will decline. Changes in interest rates have an additional impact on MBS because they affect mortgage prepayment rates. The prepayment rate for a mortgage pool affects the average life and yield. Prepayments often speed up as interest rates decline because mortgage holders are able to refinance at lower rates. Rising interest rates tend to slow loan prepayments.
  • Principal may be returned to bondholders sooner than expected if mortgage holders prepay their loans. Bondholders then may have to reinvest the returned principal at a lower interest rate.
  • Principal may be returned to bondholders later than expected if mortgage holders delay the prepayment of their loans. Bondholders then could miss an opportunity to reinvest the returned principal at a higher interest rate.
  • All bonds carry the credit risk that the issuer will default or be unable to make timely payments of interest and principal. However, GNMAs generally carry minimal credit risk because they are backed by the U.S. government.
  • GNMAs sold prior to maturity may be subject to substantial gain or loss. The secondary market may also be limited.

© 1995–2022  The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor of the Vanguard Funds. Your use of this site signifies that you accept our terms & conditions of use.  |  Manage cookies
Privacy policy  |  AdChoices  |  Security  |  Prospectuses  |  Careers  |  Mobile  |  Feedback