Written By: Joel Palmer, Op-Ed Writer As the summer home buying season gets into full swing, mortgage underwriters will soon be able to approve more Fannie Mae-supported loan applications. The upcoming version of Fannie Mae’s Desktop Underwriter (DU) program will include a increase in the maximum allowable debt-to-income (DTI) ratio for borrowers. As of July 29, loans submitted through DU can have a DTI up to 50 percent, up from the current 45 percent. According to many observers and analysis in a recent Washington Post article about the change, the increase in the DTI will help a significant number of potential homebuyers better qualify for a loan. This is especially true for millennials who are just starting out after college. Not only are they saddled with a large amount of student loan debt, they are typically earning entry-level income. “The thing that we hope to see is a lot more borrowers getting that ‘yes’ from their lender and able to become homeowners,” said Jonathan Lawless, Fannie Mae’s Vice President for Consumer Solutions.

The National Association of Realtors agreed that the increase in allowable DTI ratios will help young homebuyers. NAR has also been pushing the Federal Housing Finance Agency to “open the credit box for strong borrowers who find themselves sidelined by high fees and excessively strict underwriting.” “We believe any responsible steps that can be taken to open the credit box, especially for young and first-time buyers, will help people enter the market,” said NAR President William E. “All eyes are on the GSEs and FHA, and it will take efforts like these to avoid leaving creditworthy buyers on the sidelines.” NAR also applauded Fannie Mae’s recently announced change to how it treats student loan debt. The agency has traditionally used an arbitrary percentage of student loans, which often inflated a borrower’s DTI. Fannie will now instead use a borrower’s actual monthly payment when calculating DTI. While the DTI change is good news for mortgage processors and underwriters, as well as their clients, some question whether it’s a prudent idea to lower mortgage borrowing requirements. DTIs are scrutinized by mortgage underwriters more than any other factor, and high ratios are a leading cause of mortgage application denial.

FHA Loan information regarding Income to Debt Ratio Caluclations for FHA Mortgage Loans used to buy a home or as a refinance mortgage.

But it’s also fair to note that adding a mortgage on top of a high debt load increases the risk of loan default. According to the Washington Post article, Fannie Mae officials are comfortable with the change. Their research indicated that many borrowers with DTIs between 45 percent and 50 percent have good credit and not prone to default. Many have adequate downpayment and/or reserve funds to offset any risks from having a higher DTI ratio. Plus, Fannie Mae pointed out that having a DTI of 50 or under doesn’t automatically qualify somebody for a home loan; income, credit scores, and LTV ratios will still be strongly considered.

In addition to the change in DTI, version 10.1 of Fannie Mae’s DU will also align the maximum allowable LTV rations for ARMs with those of fixed-rate mortgages, up to a maximum of 95 percent. Another update is the criteria that determines the documentation required to verify a self-employed borrower's income.

This change will increase the number of DU loan casefiles eligible for the one year of personal and business tax return documentation requirements. Download Game Swat And Zombie Mod Apk. Recent amendments to the Home Mortgage Disclosure Act that affect the collection of a borrower’s ethnicity, race and gender will be supported by Version 10.1.

Opinion-Editorial (Op-Ed) Disclaimer For NAMU® Library Articles: The views and opinions expressed in the NAMU® Library articles are those of the authors and do not necessarily reflect any official NAMU® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Windows Xp 64 Bits Pt Br Download Iso.

Assumptions made within the analysis are not reflective of the position of NAMU®. Nothing contained in this articles should be considered legal advice.

FHA Loans - FHA Debt Ratio Guidelines FHA Home Loans FHA-Home-Loans.com FHA loan info from a FHA mortgage loan site specialized in FHA loans - FHA Home Loans.com is not a Government Agency. Navigate FHA Home Loans >>FHA Debt Ratio's FHA Loans - FHA Debt Ratio's Guidelines.......... In addition to your income, an FHA lender will look at your minimum monthly debts to calculate your income to debt ratios.

The debt ratio's is what will determine 'how much' of a FHA loan you can afford to qualify for. Following are the two types of debt ratio's that will be use: • Front-End Ratio - this is your gross income divided by the new PITI mortgage payment. This standard guideline is 29%.

• Back-End Ratio - this is your gross income divided by the new PITI mortgage payment and also you minimum monthly payments from you liabilities. The standard guideline is 41% Following is the typical debts used to determine your qualifying ratio's: Front-End Ratios • your current and or future house payment Back-End Ratios- the minimum required monthly payments on all of the following: • Auto Loans - (except if there is less than 9 months left to pay off) • Student Loans - (except if there is less than 9 months left to pay off) • Personal Loans (except if there is less than 9 months left to pay off) • Charge Cards - minimum required payments only. • Child Support - (except if there is less than 9 months left to pay off) • Alimony - (except if there is less than 9 months left to pay off) • Federal Tax Lien Repayment Schedules - (if less than 9 months not calculated) Following are monthly liabilities that are not used to calculate debt ratio's: • Utility Bills • Car & Health Insurance • Cell Phone Bills • any bills not reflected on your credit report. The percentage of debts to income is called the debt-to-income (a.k.a.: back-end) ratios. A good goal is to spend no more than 38% of your income on all debts, including house payment. However, under FHA home loan guidelines you're allowed to spend up to 41% of your monthly income on housing and other debts -- if the rest of your loan application shows you can handle it. An example of the income to debt calculation is as follows: Income = $3,000 New Mortgage Payment = $900.

Minimum Monthly Payments = $300 'Mortgage' divided by 'Income' = 30% 'Mortgage + Monthly Payments' divided by 'Income' = 40% In this scenario, your front-end is 30% and back-end is 40% which is acceptable for a FHA loan. These ratios can also adjusted or exceeded if there are item(s) you can payoff, lower interest the interest rate, lower the loan amount, etc. FHA is the most flexible lender regarding debt ratio's. Never rule yourself out of buying a home until you have spoken to a mortgage professional. Learn exactly how much of a FHA loan you can qualify for by clicking..........