Fannie Mae is Tightening Debt to Income Ratios, Will You Still Qualify for a San Diego Mortgage Loan?

  11/19/2009

Fannie Mae Lowers the Debt to Income Ratio to Qualify for Home Loans.

Fannie Mae has said that the debt to income (DTI) requirements for all applicants will be going  down from 55% to 45% (more income to qualify) so anyone looking for a San Diego mortgage loan should re-qualify as soon as possible.  On a regular basis Fannie Mae reviews the DU system (desktop underwriter) to limit losses and to ensure that credit risk assessment will stay strong on as many future loans as possible.  The new rules will go into effect between now and  December 12th and one major lender has already changed guidelines to the new levels.  This new change in the San Diego mortgage and home buying process should not be a surprise considering the recent mortgage loan performance in San Diego and the rest of the country.  From 2003 until just last year the maximum debt to income ratio on most home loans was 60%, these ratios do not include food , utility bills, gas, insurance or anything else that is not listed on the credit report. If you factor these in it is easy to see why home buyers didn’t have much left over at the end of the month.  With just a few unexpected expenses a home owner qualifying at such a high ratio could easily contribute to the recent “correction” that we have seen in the San Diego real estate market.

Make Sure that You or Your Client Still Qualify for that New San Diego Mortgage Loan!

It is extremely important that all perspective home buyers get re-qualified for their San Diego Home Mortgage. Since most soon to be San Diego home buyers have been putting in multiple offers on many properties to try and have one accepted for MONTHS they might be pre approved at a higher DTI and will no longer qualify for the same price home. Working with an experienced mortgage planner is more important than ever because with a proper file there are some exceptions for this new rule.  Fannie Mae has announced that on an exception basis some loans will be approved at up to 50% DTI.  There must be strong compensating factors like a steady job history, a large amount of assets and high credit scores.  It is extremely important that all documentation is  packaged properly UP FRONT before the property search even starts and before anything is submitted to the lender to ensure that a strong case can be made for any exceptions. It may be necessary to pay off a few small debts or to restructure a file completely even if a borrower was pre-qualified just a month ago.

If you or someone that you know is looking to buy or refinance a home in San Diego now is the time to make sure you still qualify.  Give us a call at 619-285-2921 or click here to apply online.  You can also download out printable mortgage planning package by clicking here.