Mortgage Loan Guideline Changes
Conforming Fannie Mae & Freddie Mac Debt Ratios:
Since December 12, 2009 the maximum debt ratios are as follows. References to DU 8.0 are due to the pending update to Desktop Underwriter(automated underwriting).
* DTI > 45% must be approved thru DU Version 8.0
* Fannie Mae indicated that debt ratios exceeding 45% require compensating factors. Fannie does not publish a list of compensating factors and it is unknown whether DU 8.0 will approve above 45%
FHA, VA, USDA & Bond Program Loans:
Effective with loans funding on or after December 12, 2009 the maximum debt ratios are as follows.
* Maximum DTI 50% regardless of AUS(automated underwriting) Findings.
* DTI 45% - 50% at the sole discretion of the underwriter who will require measurable compensating factors, including, but not limited to 12 months verified housing history with no late payments. Limited payment shock. Cash reserves. Possible increased down payment.
Minimum FICO on ALL LOANS will be 620..... Gov't or Conforming.
Get ready for 640+ credit score requirements as I believe the tightening will continue.
Borrowers need to prepare themselves to provide more documentation than ever before. Realtors... prepare your clients!!
But there still has been some exceptions with different buyers due to their strength as a borrower. So there can very well be some compensating factors to get that buyer approved. So do not hesitate to right an LOE (letter off explanation) about the file. This way you make a story behind the file before the underwriter makes there on determination of what the story may be.