Some great changes are coming to Fannie Mae loans on July 29, 2017. This benefits Texas homebuyers by allowing more people to qualify under more flexible guidelines. Fannie Mae recently announced new changes to its Desktop Underwriter® (DU®) Version 10.1 in order to make underwriting easier and simpler for Texas home buyers.
One of the best changes that will help many borrowers with debt-to-income ratios between 45% and 50%. The DU Version 10.1 maximum allowable debt-to-income ratios (DTI) will be adjusted to consider applications with a maximum DTI of 50%. In the past Fannie Mae loans limited total debt to income ratios to 45%. This extra 5% will help many more homebuyers qualify for the home they want. Often times commissioned or self-employed borrowers have trouble documenting acceptable income. With this flexibility more people will be able to buy.
Fannie Mae said that for DTIs above 45% and up to 50%, DU will no longer require certain additional compensating factors.
Here is a list of loan categories that will see changes:
•DU Risk Assessment
•Maximum Allowable DTI
•ARM LTV Ratios
•Self-employment Income Documentation
•DU Validation Service
•Property Inspection Waiver
Changes regarding disputed trade lines. The new DU Version will also include an updated risk assessment and messaging for borrowers with disputed tradelines. DU will first assess all tradelines reported as disputed by the borrower. Once DU issues approves the loan using the disputed tradelines, no further documentation will be needed. In the past, borrowers with disputes on their credit report were not eligible for financing unless additional due diligence and paperwork was completed. In essence the borrower had to remove the disputes on the credit report.
The maximum loan to value (LTV) ratios for adjustable rate mortgages (ARM) will be aligned with fixed-rate mortgage LTV ratios for all transaction, occupancy, and property types, up to a maximum of 95%.
Self-Employment Income Documentation will be updated. According to Fannie Mae number homebuyers with one-year personal and business tax return documentation will increase. That doesn’t mean that the borrower can be self-employed for only one year, rather than only the latest year of filing would be used qualify. The number of years the borrower has been self-employed and the quality of the credit file will play a major part in determining if the latest your filing will be used. This is good news for self-employed individuals that have had their best year ever.
Changes to the Property Inspection Waiver. Fannie Mae has done a lot of work on collateral underwriting. This is an automated system that analyzes the value of the property being borrowed against and determines if the purchase price is acceptable to Fannie Mae. If it is, they will issue a waiver of the appraisal. This is good news because the appraisal can run from $400-$600 and can often times take a couple of weeks to complete. However, not all lenders are participating in this appraisal waiver.
Richard Woodward, NMLS 217454
Your Local, Direct, 5 Star Rated Mortgage Lender, Specialty Lending Manager
Office: (214) 945-1066
Service First Mortgage NMLS 166487
6800 Weiskopf Ave #200, McKinney, TX 75070
Licensed by the Texas Department of Savings and Mortgage Lending (SML) Mortgage Banker Registration. Service First Mortgage is an Equal Housing Lender. This is not an offer of credit or commitment to lend. Loans are subject to buyer and property qualification. Rates and fees are subject to change without notice.