Raise The Roof! Fannie Mae Has Raised Their DTI Ceiling!

Have you ever been rejected for a mortgage due to your debt-to-income ratio? Or know someone who has? Well good news: starting July 29, Fannie Mae is raising the DTI ceiling to 50 percent! Currently, it sits at 45 percent.

Never heard of DTI? Debt-to-income ratio takes your gross monthly income and determines what percentage of that goes towards any debts that you may have – credit cards, loans, etc. including what your new mortgage payment would be. You can find a free calculator here.

No need to get alarmed quite yet if your ratio is higher than 50 percent. Fannie Mae, Freddie Mac and the Federal Housing Administration all have exemptions allowing you to buy or insure loans, even if you have a DTI above 50 percent.

Word of advice, however, high DTIs are viewed more critically by lenders than any other factor – including credit score. The reason is simple: more monthly debts = a greater risk of late mortgage payments.

Having a lower DTI does not mean that you’re automatically good to go, however. There are still several other factors involved in the approval process, such as your down payment, your credit score and more.

Want to find out what loan you can be approved for? Give us a call today!