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NAR Welcomes Fannie Mae’s Increase in Debt-to-Income Ratio

Fannie Mae has increased its debt-to-income (DTI) ratio from 45 percent to 50 percent which is a significant change which will ease the home buying process for homebuyers carrying student loan debt and can help them qualify for a home mortgage loan.

Recently, Charlie Dawson of NAR Government Affairs and Jonathan Lawless of Fannie Mae sat to discuss these changes and the effects it has on the housing market nationwide. They discuss how these changes aim to help homebuyers when someone else is paying their student loan or other debt. Today, these debts count against the homebuyer, even though someone else is paying them. Thus, if homebuyers can document someone else is paying these debts, Fannie Mae will exclude them from the DTI calculation. Lastly, with the rise in debtors, lower student loan payments were getting ignored in underwriting which counted against your DTI. Now, Fannie Mae will use the payment the borrower is actually making, not what was included in the original repayment agreement.

For more information, please watch this short video from NAR.

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