Fannie Mae, the largest federal loan insurer, has made some changes in their guidelines for home loans. The new rules go into effect 13 December this year. While it may make getting that loan a bit more difficult for a few, it will make it easier for some.
The minimum down payment required by Fannie Mae remains at 5%. However, that money may now be a gift or grant from a non-profit. Current rules require that down payment minimum be from the borrower’s personal funds unless 20% or more was paid down. Addition funds above the 5% can be gifted or granted.
Since most lenders (remember, Fannie & Freddie are Insurers, not lenders) require 10% or more, most homeowners still had to come up with money from other sources.
Now the more difficult part. The debt-to-income ratio has been decreased. Current guidelines allow 55% of the borrower’s income to go toward debt. The new standard drops that to 45%.
Payment histories are now going to play a heavier roll in the process also. A missed or late payment might have been overlooked or minimized before but now will carry a 5% DTI (Debt-to-Income Ratio) hit! This could be huge for some.
Source: The New York Times READ MORE
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