New Year - New Bank Guidelines!

Ringing in the New Year seems like just another day, but 2010 will bring some changes to the lending guidelines. Below are some significant change that would affect a buyer's approval or the type of property you may purchase.

Change #1: Conventiaonal Loan Debt to Income (DTI)
2009 - DTI was 55% for Conventional
2010 - DTI is NOW 45%

**FHA will still allow DTI to be 55%

Definition for DTI: The ratio of monthly debt payments to monthly gross income. Lenders use a housing DTI ratio (house payment divided by monthly income) and a total DTI ratio (total debt payments including the house payment, divided by monthly income) to determine whether a borrower's income qualifies him or her for a mortgage.


Change #2: FHA Approved Properties
In order for FHA (Federal Housing Administration) to lend money on a property it first must be "FHA Apporved". As of February 2010 all properties that are FHA must get approved again.

What does this mean for you the bueyer?

This Process could take over a month to obtain an approval. Expect Longer escrow times in 2010 due to this change.

*** I do know of a Lender/Bank that once they approve a few of these properties FHA will allow them to administrate the approval process without getting the FHA Approval. Please feel free to contact me with further information.