New rules for student loans that were announced by Fannie Mae earlier this year allow people who have income based repayment plans and graduated payment plans to qualify for more house! The old way: if the student loan was an income based or graduated payment, the lender would consider the payment to be 1% of the balance on the loan despite whatever the actual payment is. New way: use the actual income based program. These rules will make it possible for people who would have previously been shut out or limited to a lower sales price to qualify for more! In one example the borrower had $85,000 in student loan debt and an income based repayment plan of $300 but a payment of $850 had to be used in qualifying (1% of the balance on the loans). Under the new rules, the borrower can use the $300 payment and qualifies for $550 more per month in housing payment!! If you know anyone who tried to get a mortgage in the past couple of years but their student loan debt got in the way, let them know that things have improved! Click here to see a recap of the new loan guidelines.
Additionally Fannie Mae’s automated underwriting system is being updated on July 29, 2017. At that time it is expected that more people will be approved for total debt ratios (housing + debt / income) up to 50%. Most loan programs, including Fannie Mae, require the loan to be run through automated underwriting successfully. For most the cap for debt ratio has been 45% or less but the new guidelines anticipate that more, but not all loans, will be capped at 50% Now a person with income of $5000/month will potentially qualify for $250/month more in a housing payment!
And there’s more good news! Many housing agencies use Fannie Mae automated underwriting, including the NH Housing Finance Authority!
Author: Renee Duval – A Certified Mortgage Professional (CMP) with the NH Mortgage Bankers & Brokers Association. NMLS# 97937. Merrimack Mortgage Company, NMLS#2561, is an Equal Housing Opportunity lender. The views expressed in this blog are those of the author, Renee Duval,and do not reflect those of her employer, colleagues or its clients. The information provided is for informational purposes only and is not intended as legal or tax advise. Programs are subject to change without notice and underwriting approval.
Check out www.nhmortgages.com for more info on mortgage loans and qualifying for a mortgage.
