Beginning December 11th, it will officially be harder to qualify for a home loan.
In the past and up until 12/11/09, lenders allow(ed) your qualifying ratio to go up to 55%, at least with compensating factors of good credit and 20% equity or down payment in a home.
Your qualifying ratio is the calculation of your total housing payment obligation (mortgage, property taxes and insurance/HOA dues) plus your monthly payment obligations on any debt (credit card, student loans, car loans…) divided by your monthly gross income. With good credit and equity, lenders have accepted ratios up to 55%.
The rule is changing and the qualifying ratio can be no greater than 45%. This will affect how much you can qualify for, so the change is significant.
If you’re thinking about refinancing and your ratio is tight, you may want to get your rate locked by the 11th; otherwise, the opportunity may be missed.
If you’re currently preapproved to buy a home but not have found a home yet, this can change your purchase price and loan amount level, so discuss this with your mortgage professional or let me know if I can help.
