Fannie Mae is releasing an update to their ubiquitous Automated Underwriting System DU.
One of the unlikely benefactors of the guidelines being installed in the approval "engine" are self-employed borrowers. In the previous versions of the DU software a borrower's self-employed status was considered an additional risk factor. They have now removed this risk factor so the type of employment will no longer be considered in approving the loan.
Fannie Mae did not explain why they made this change but the result will be to make it easier for a self-employed borrower to qualify for a home loan after May 31st, 2008.
If you are self-employed and are curious about how to qualify for a home loan, just send an email and I'd be happy to answer any questions.
Make it a great Thursday!!
Hi Spokane;
Great news for Realtors and the public. Thank you for sharing.
Joe, you reminded me to add another benefit of the FNMA DU system (although this is "old") that not many lenders know about - the "standard" guideline says a self-employed person needs to provide at least 2 years of tax returns to verify income. Assuming DU likes the loan (and I've seen it) the requirement is for only 1 year of tax returns and 6 months of self-employment.
Now, not many self-employed borrowers make enough money in the first 6 months of business to show a huge income on their tax return but it is possible.
The big advantage is only needing to average the income over one year as opposed to two.
OOPS!!!! Joan, I honestly forgot who my audience was - Realtors, Builders, or anyone connected to those industry's (myself included) may still have a tough time.
Lenders have a completely separate set of guidelines for those of us in the real estate industry that overlay the FNMA guidelines. I'm not saying Realtors won't get a loan.
I'll have to look those up and re-post!
Thanks for the info! I am always being asked by my loan officers about the latest and greatest changes in guidelines. It is nice to be able to find the information here.
I love being able to give an answer that makes me look like I know what I am doing, which lately with all of the changes in the industry is getting harder and harder to do.
Thanks again.
That is great news for self employed. If you can verify income then you shouldn't be penalized because your are self employed. If you can afford it and are self employed, then you can probably really afford it because we look at your adjusted gross income.
John Thomas - Certified Mortgage Planner