Fannie Mae recently announced changes to conforming loan guidelines and all of the updates are potentially very good news for borrowers. In fact, a recent Forbes article stated that “mortgage financing will become more available to more home buyers as a couple of game changing underwriting guideline enhancements come online.” It’s important to understand what has changed and what it means in terms of qualifying for a mortgage. Here are some highlights:
Enhanced High Balance Loan Eligibility
High Balance Loans are now loan-to-value (LTV) eligible up to 95%, for loan amounts up to the maximum high balance loan limits. (LTV is the loan amount divided by the sales price of home). This change potentially increases the amount you are eligible to borrow, with only a 5% down payment required.
Enhanced Gift Eligibility to Ease Down Payment Pressure
As mentioned above, the minimum down payment for a conforming loan is 5%. Borrowers are now eligible to use gifts to fund all required down payment and closing costs.
More Flexibility for Non-Occupant Borrowers
Fannie Mae’s risk management system (also known as Desktop Underwriting or DU) will now also consider the income and liabilities for all borrowers on all owner-occupied transactions. No separate debt-to-income calculation will be required for the occupant buyer.
If you want to know more about how these and other changes might apply to you, contact a loan advisor who will evaluate your financing needs and offer solutions.