Melissa has some news we should all know about, since so many mortgage loans are being insured by FHA these days.
Via Melissa Kulikoff (Texas Loan Officer):
Debt to income ratio maximums are being changed for FHA effective today. All loans with Debt Ratios that exceed 50% must fund by 11/30/2009. These loans must also be locked by November 1st. If they do not fund, no lock extensions will be granted.
The debt to income ratio is the percentage of the borrowers gross income that goes towards their mortgage payment and other debts. In the past, we were able to close FHA loans with ratios at 55% and higher, rarely over 60%.
I urge you to contact your loan officer and find out what their policy is. This is also going to cause another wave of applicants with higher ratios scrambling to close by 11/30 regardless of whether they are a first time home buyer or not. Some banks may allow you to go a few days past the deadline, but not mine.
I also heard that Conventional debt to income ratios are going to be limited to 45% regardless of down payment in December. Right now, with 20% down on a Conventional loans we can exceed 55% with strong credit.
I hate to be the bearer of bad news, but I rather be the first one out to notify my AR friends.
As always, please feel free to contact me with comments or questions regarding this post.
Melissa Kulikoff
Texas Loan OfficerResidential Lending Services
cell: 210-849-9030
email: melissa@mkulikoff.com
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Robin Rogers, Realtor, Broker-owner, ABR, TRC, CRS
Also Cat Owner, Photographer, Smartass, Aspiring World-Class Drummer
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Robin,
I'm not only thankful for the re-blog, I'm glad you are helping to get this information out to our friends on AR. These announcements often come so suddenly, that an unprepared buyer/seller/lender or Realtor can get stuck with a big headache!
I presume you are talking about the back-end ratios, but I also don't know how a person can afford to juggle a paycheck with a 50% debt ratio. I suppose that means home buyers can't drive new cars anymore. Not that many could in the first place.
This is actually a good thing. Maybe it will stop some of the foreclosures.
I had a big headache on Friday, when the buyers of one of my listings had to back out. They couldn't get FHA financing and didn't have the cash to go with conventional.