Fannie Mae Lays Down New Rules for Mortgage Borrowers

Fannie Mae is tightening restrictions on mortgage loans. Will this make it more or less difficult to get a loan for a home?

For home buyers who have been trying to get a loan and take advantage of today’s low mortgage rates, Fannie Mae has announced some new regulations that may make it easier for some buyers to secure a mortgage. Unfortunately, some of the new guidelines may make it more difficult for others to secure a mortgage loan. Here are some of the specifics you should know about Fannie Mae’s new guidelines.

* The new guidelines will take effect on December 13.

* Under the new guidelines, Fannie Mae will allow home buyers to use grant money and gift money from nonprofit organizations to use toward 5 percent down payment on their home.

* Mortgage loan borrowers will have to come up with another 5 percent to put down on their home purchase. This extra 5 percent can come from their own funds or from gifts.

* The rules regarding gift money applies to single-family primary residences. This can include condos, town homes and traditional homes.

* The limit of the loan balances will be determined by where you live. For instance, in New York City where costs are typically high, the limit on the loan balance will be $729,000. In other places across the country, the limit could be as low as $417,000.

* Regarding debt-to-income ratio, Fannie Mae is getting tough on buyers. Currently, some home buyers are approved for mortgage loans when they have a 55 percent debt-to-income ratio. Under the new guidelines, however, that ration can be no higher than 45 percent. That means that no more than 45 percent of your monthly income can go to pay debts if you are looking for a traditional mortgage loan.

* If you have missed a payment on your revolving debt in the past, Fannie Mae is going to be tougher on you when it comes to getting a mortgage. Now you will have 5 percent added to the ratio of your total debt-to-income balance if you missed a payment in the past. This could be the difference between be approved or denied for a mortgage loan through Fannie Mae.

* Student loan debt is going to be a major hindrance to getting a mortgage through Fannie Mae. Even if you have deferred your student loans, Fannie Mae could count that as missed payments.

* Those who have gone through a foreclosure used to be able to get another loan through Fannie Mae after four years. With the new guidelines, you will have to wait seven years after going through a foreclosure before you will be considered for another mortgage loan.

These are just a few of the new guidelines that Fannie Mae is implementing to protect itself against the problem that has recently happened in the mortgage industry. Keep these in mind if you plan on purchasing a home any time soon.

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