Changes to DTI Requirements

Fannie Mae eases up on requirements, allowing more borrowers to become homeowners.

A borrower’s debt-to-income (DTI) ratio is the number one factor lenders consider when determining a borrower’s ability to qualify for a home loan, according to the Federal Reserve and FICO®. A higher DTI ratio may keep borrowers from getting approved for their mortgage.

What are Fannie Mae’s DTI changes?
Starting on July 29, 2017, Fannie Mae will raise the DTI ceiling from its current maximum of 45% to a 50% maximum. These changes are based off of Fannie Mae’s risk analysis, which revealed that many potential homebuyers have DTIs in the 45 to 50% range, but also have good credit and are not very likely to default on payments.*

Fannie Mae’s changes could open the door to homeownership for your clients who had previously been denied due to their DTI ratio.

Another change coming in July:
Fannie Mae will increase the loan-to-value (LTV) ratio maximum for adjustable rate mortgages (ARMs). The current maximum is 90%, but starting July 29, 2017, the maximum LTV ratio will be 95% for owner occupied properties. ARMs could be a good option for a borrower who knows they’ll move in a few years or for someone who knows they will be able to pay off the loan quickly.

In order to view the flyer available for marketing purposes, please click on the following link: Fannie Mae DTI Plug & Play Flyer<http://www.lenderselectmortgage.com/wp-content/uploads/2017/07/Fannie-Mae-DTI-Flyer.pdf> .

Please feel free to reach out to your LSMG AE and/or TC today with any questions on how the DTI changes could benefit your borrowers.

*Survey Source: https://www.mortgagecurrentcy.com/index.php?article_number=2644 – 2644<https://www.mortgagecurrentcy.com/index.php?article_number=2644#2644>

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