Getting approved for a Florida mortgage is about to get harder, as Fannie Mae has announced new modifications to its home loan guidelines – for the second time in less than 3 months.
In their official announcement, Fannie Mae provides details on the updates, meant to reduce the overall risk they take on when they back loans.
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. Period. No exceptions. Well, nearly no exceptions.
A second change pertains to loans that require private mortgage insurance (PMI). Homeowners whose loan-to-value (LTV) exceeds 80 percent now have a choice:
- Accept higher mortgage insurance premiums month-after-month
- Accept a one-time fee paid at closing to compensate for higher risk
Both of these mortgage PMI options mean higher costs for Florida home loan borrowers.
Finally, a third change effects the maximum allowable debt-to-income ratio. As announced in a separate document, Fannie Mae will no longer allow borrower expense ratios to exceed 45 percent unless they can show very strong assets and credit to back it up.
In no case will expense ratios be permitted to exceed 50 percent.
Borrowers can expect these new Fannie Mae updates to go into effect during the weekend of December 12.
Therefore, if you’re going to need (or want) a new Florida mortgage later this year, consider moving up your timeframe to October or November. Once the guidelines change, getting approved for a home loan is going to be tougher.
I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage loan originator, I’m your guy. Call me at 888-859-7418 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!
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