The country’s largest source of mortgage money, Fannie Mae, now plans to ease its debt-to-income (DTI) requirements, possibly opening the door to home-purchase mortgages for a large number of new home-buyers. Fannie recently stated that they will be raising their DTI ceiling from the current 45% to 50% as of July 29!
As usual, of course, the lower your DTI ratio the better. The federal “Qualified Mortgage” (QM) rule still sets the safe maximum at 43%, though Fannie Mae, Freddie Mac and the Federal Housing Administration all have exemptions allowing them to buy or insure loans with higher ratios.
Now that doesn’t mean everybody with a DTI higher than 45% is going to get approved under the new policy. As a loan applicant, you’ll still need to be approved by Fannie’s/Freddie’s automated underwriting system, which examines the totality of your application, including the down payment, your income, credit scores, loan-to-value ratio (LTV), etc…
The system weighs the good and the not-so-good in your application, and then decides whether you meet the company’s standards (ie: the less risky the better).
The downside? Yes, there is one.
With both Fannie and Freddie, their credit-score requirements tend to be more restrictive than FHA’s. So if you have a FICO score in the mid-600s and high debt burdens, FHA may still be your main mortgage option, even with Fannie’s new, friendlier approach on DTI.
So if you’ve been declined in the past because of your debt-to-income ratio, you may be able to get re-evaluated under the new 50% DTI guidelines and get yourself pre-qualified for that purchase very soon, and Global Unity Mortgage can help you do just that!
Contact Global Unity today at firstname.lastname@example.org or call 860-872-9479 for more information on this exciting change.