A recent shift by Freddie Mac and Fannie Mae made it easier for borrowers with higher levels of debt to obtain a home loan. The government-backed mortgage giants announced that it will begin accepting borrowers with debt-to-income (DTI) ratios up to 50%. Previously, lenders were only accepting DTI ratios up to 45%. This policy change is expected to be fully implemented by the end of July.
Mortgage underwriting guidelines tightened significantly after the financial crisis. As a result, the default rate on home loans is lower than the historic norm – but young homeowners have gotten squeezed out of the market, unable to qualify (often due to student debt). Industry experts predict that this small shift will permit a greater number of deserving homebuyers to qualify, while adding minimal risk to the mortgage market.
If you’re interested in obtaining a mortgage or learning more about the home loan process, we’d love to introduce you to our network lenders! Be sure to give us a call at (215) 699-5555.