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After finding a lender who is qualified to issue a Fannie Mae-backed loan, the borrower will be guided in filling out a Uniform Residential Loan Application where they will need to gather and provide financial information and documentation. <\/p>
The documents include a record of employment and the borrower’s gross income and statements, like a W-2 or 1099 form to back these up. <\/p>
The borrower will also have to provide a total of their monthly debt obligations, like car payments, balances on credit cards, alimony, and child support.<\/p>\n
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The lenders prefer to follow the 28\/36 Rule, which means less than 28% of the household should be spent on monthly income on housing expenses and less than 36% on debt servicing which includes mortgages and car loans. <\/p>
The maximum debt-to-income (DTI) ratio that Fannie Mae will accept is 36%, and if the borrower meets credit score and reserve requirements then it can be as high as 45%.<\/p>\n
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If the borrower’s DTI ratio is too high, then they can make a larger down payment so to reduce their monthly costs. Even if a 20% down payment is considered ideal, some borrowers can put as little as 3% down.<\/p>\n
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A minimum credit requirement is also needed to be met by homebuyers to be eligible for Fannie Mae-backed mortgages. <\/p>
For a single-family home that will be a primary residence, a FICO score of a minimum of 620 for fixed-rate loans and 640 for adjustable-rate mortgages (ARMs) is required. <\/p>
When the FICO score is higher, then they are more eligible for the lowest available interest rates.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t