Fannie Mae, the company that writes the underwriting guidelines for conventional loans, has made some changes to the income guidelines.
The most significant changes involve variable income. Fannie Mae now explicitly describes "how lenders should evaluate, document, and calculate income that fluctuates, such as hourly pay, overtime, and commission income." In the past, Fannie Mae allowed lenders a great deal of discretion in how they calculated and documented income. That has changed. Now, lenders are told exactly how they must calculate and document income.
Although the changes will probably have a big impact on some lenders, those lenders who are already using "common sense" underwriting will not notice any changes at all. After reading through the new underwriting guidelines, we discovered that Fannie Mae has finally put in writing what we have been doing for years.
This is very good news for real estate agents and borrowers because much of the guesswork has been removed from the loan approval process. If your lender knows the guidelines, their loans will close.
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