Effective December 12, Fannie Mae is lowering their maximum allowable debt to income ratio for borrowers. Their current 55% maximum will be lowered to 45%. A debt to income ratio is determined by taking a borrowers monthly debt (PITI mortgage payment + Auto Payments + Student Loan payments + Minimum payment on credit cards) divided by their Pre-Tax monthly income. A borrowers monthly income is still determined by underwriting rules. Bonus/Commission/Overtime require a 2 year average and Self Employed/1099 borrowers base income on their tax returns (usually the Adjusted Gross Income). Also, Fannie will no longer allow fico scores under 620 regardless of any other loan factors.
This is not the opinion of Brad Bergamini, Realty Executives Northern Arizona or any of its affiliates. This post is for informational purpose only and is not guaranteed and does not render as legal advice. Buying and selling Real Estate in Arizona or Prescott Arizona is a serious task and should be consulted with personally with Realtor or Real Estate Attorney. Please visit my website for contact information