WASHINGTON – Oct. 17, 2013 – Government-backed mortgages with Fannie Mae will soon undergo new changes through Desktop Underwriter (DU), an automatic program that follows strict guidelines without input from lenders. The new changes will increase flexibility for certain borrowers, but they’ll make it harder for others to qualify due to loan limits, restrictions and more costs.
The current downpayment for Fannie Mae conforming loans is 3 percent, but it will increase to 5 percent for loans submitted after Nov. 16. Some homeowners may not be able to afford 5 percent on a downpayment, and many have been attracted to Fannie Mae loans because the cost was so low.
The increase could deter some first-time homebuyers from applying for a Fannie Mae loan. However, the loans won’t have upfront mortgage insurance costs, unlike current loans with a 3 percent downpayment and FHA mortgages.
In addition to higher downpayments, loan limits have been reduced so that no mortgage can have as term longer than 30 years, as opposed to 40.
A complete overview of the new rules is available on Fannie Mae’s website.
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Reprinted with permission. Florida Realtors®. All rights reserved.