Fannie Mae recently released a new version of their underwriting engine, and it’s a lot more relaxed in some of its underwriting and documentation requirements.

Some enhancements:

  • May allow 1-year tax returns for self-employed individuals
  • Non-Occupant Co-Borrowers (co-signers) are now allowed
  • High-Balance Loan-to-Value ratio up to 95% (was 90%) for a primary home. This means 5% down is allowable, up to your county’s high balance loan limit ($625.5k in the Bay Area counties).
  • Higher Loan-to-Value ratios allowed for cash-out refinances

This is huge news, and hopefully can help some people make homeownership happen. It’s very fascinating to have been in the business since 2001 and to see these sort of fluctuations in the lending landscape, and how the guidelines either ease up or become more restrictive depending on confidence in the market.