Fannie Makes Additional Changes…Impact for Relocating Employees?
Fannie Mae is scheduled to make several additional changes to borrower eligibility, underwriting requirements and available products in hopes to further support the sustainability of the housing market.
Two of the biggest changes will occur in the areas of credit score and debt-to-income (DTI) ratios. Fannie Mae is raising the minimum qualifying credit score to 620 from a minimum of 580. This will affect loans that are submitted to an automated underwriting engine as well as with all manually underwritten loans. This minimum credit score requirement will apply to all mortgages that are delivered to Fannie Mae including conventional loans and loans insured or guaranteed by a federal government agency such as FHA or VA.
In an effort to support sustainable homeownership for borrowers, the maximum DTI or allowable total expense ratio will be reduced to 45%. This is a substantial decrease because up until recently, DTI ratios were allowed to go almost as high as 60%. On certain loan files with strong compensating factors, there will be the potential flexibility to go as high as 50%.
It is highly recommended that relocating employees contact their mortgage lender and get pre-approved as soon as possible once they know a relocation is in their future. This will provide them a clearer understanding of what they can truly afford or what they may need to do in order to purchase their new home.
Posted on 10/7/2009 in Mortgage | Comments (0)
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