The majority of FannieMae changes in 2017 have made it easier to qualify for a conventional mortgage.
For this article I will discuss a few of the most beneficial changes.
Student Loans are arguably one of the biggest issues for many first time buyers when it comes to qualifying for a mortgage. Early in 2017 FNMA made the following changes to student loans:
¨ Income Based repayment is OK, even if it doesn’t full amortize the loan (not the case for FHA which requires a fully amortizing payment)
¨ If no payment (Deferred) on the credit report we can use 1% of the balance to calculate the payment for qualifying.
The Biggie- Debts paid by others: Previously the only way you could omit a debt paid by another person was if it was a joint or cosigned loan where you could prove the other person was making the payment. Fannie Mae is now allowing Installment debt (Student loans) to be omitted from qualifying if we can prove the past 12 payments were paid by another party, even if they are not obligated to pay. This will also include car loans or any other installment debt, but not mortgages. To put this into perspective- If Mom and Dad are paying their child’s student loan (which is very common) that student loan debt is no longer a factor in qualifying, with the average student loan payment being $280/month that would equate to more than $50,000 in a mortgage.
In the third quarter Fannie also made a change to allow ratios to closely match FHA. Before this change we were limited to a 45% back end ratio. Now it may be possible to increase that to 50%. While 5% may not seem to be a big change, a buyer making $60,000/yr will have room for an additional $250/month in debt or mortgage.
Keep in mind that there are other factors involved that are unique to each individual file that may not allow lenders to stretch—if you have been told you couldn't qualify due to student loan debt, or debt in general– it may be time to revisit the subject to see if you can buy now.
#studentloans #qualify #mortgage
Robert Rauf is a licensed Mortgage Loan Originator (NMLS#248937) at HomeBridge Financial Services, Located in Toms River, NJ. RobertRauf.com
Robert Rauf
Mortgage Loan Originator NMLS# 248937
http://www.homebridge.com/RobertRauf
or my blog: http://activerain.com/blogs/rrauf
Office: (732)908-4868 Cell (732)740-0175
RRauf@HomeBridge.com
www.RobertRauf.com
Since 1987 I have been helping my clients fulfill their dream of home ownership! HomeBridge Financial Services, Formerly REMN, HomeBridge Financial Services is located at 16 Madison Avenue, Building 2 Suite 2D Toms River, NJ 08753. NMLS #6521. New Jersey Licensed Lender and Mortgage Banker #L041053. Visit www.Homebridge.com for more information. NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey, Toms River NJ 08753, Toms River NJ 08755, Brick NJ 08723, Brick NJ 08724 Mortgage in Ocean County NJ, Mortgage in Monmouth County NJ, Jackson NJ 08527, Howell NJ 07731, Lacey 08731 08734, Beachwood Bayville , Manchester 08757 08733, Manahawkin 08050, Robert Rauf is a Licensed Mortgage Loan Originator in New Jersey.
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