First Time Home Buyers
Mortgage guidelines are tightening for the second time in less than 3 months, Fannie Mae announced.
In its official announcement, Fannie Mae details the updates, meant to reduce the overall risk.
The first major change is with respect to credit scoring. All Fannie Mae loans — whether underwritten electronically or manually — require a 620 credit score minimum. There are very few exceptions.
Another change relates to maximum debt-to-income ratio. As announced in a separate document, Fannie Mae will no longer approve expense ratios exceeding 45 percent except with very strong assets and credit to back it up. In no case can expense ratios exceed 50 percent.
Fannie Mae implements its updates during the weekend of December 12.
Therefore, if you’re going to need (or want) a new mortgage later this year, consider moving up your timeframe to October or November. Once the guidelines change, getting approved for a mortgage is going to be tougher.
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