Fannie Mae recently announced new underwriting guidelines for debt-to-income ratios (DTI) that will help make it easier for some borrowers to qualify for home loans.
What is DTI?
DTI is an important risk measurement of a borrower’s ability to manage monthly payments and repay debts. DTI is calculated by dividing total recurring monthly debt by gross monthly income.
What are the new guidelines?
The maximum allowable DTI will be 50 percent. Borrowers with DTIs between 45 and 50 percent will no longer be required to have certain additional compensating factors.
These changes apply to loans submitted via Fannie Mae’s Desktop Underwriter on or after the weekend of July 29, 2017. Previously submitted loans are not eligible to be resubmitted.
The good news is these new guidelines expand the potential eligibility for borrowers to purchase a home even if they have a relatively higher DTI.
If you’d like to learn more or have a question about home loan products, please get in touch with me today. I’m happy to help!
Source: Fannie Mae