Fannie Mae has announced that DU 10.3 coming out the weekend of December 8, 2018, will have new underwriting guidelines. If you plan to apply for a home loan soon, or if you are a mortgage lender, here is what you need to know.
Tighter Rules for Debt Ratio
For people who have a high housing ratio, approvals are tightening.
This means if the house payment is most of your monthly outgo, you will not be able to push the debt-to-income ratio as high as before. Statistics show that people who have little to no debt other than their house payment are a greater risk to lend to when the house payment pushes the limit.
Looser Rules for Appraisal Waivers
More properties will receive an appraisal waiver as those loans continue to perform well.
This means that if you have a good credit score, good assets, and a good down payment, Fannie Mae might not require an appraisal on the property, saving time and money on the loan. However, even if you do have all those factors, an appraisal report could still be required for another reason, such as there is not enough data on the particular address.
Good News for Medical Collections
This is not a change, but as a reminder, medical collections do not factor into the credit score.
No Tax Liens or Judgments on Credit Reports
Judgment and tax lien information are no longer reported on the credit report due to the National Consumer Assistance Plan.
However, lenders use other sources for discovering liens and judgments, so you still have to deal with them to get a home loan. If you have been a tax lien and a payment plan, and if you’ve been paying on time for 12 months, that will not stop you from getting approved for a mortgage.
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