1. Revolving Debt: If borrower is paying off a revolving debt (credit card), the borrower also had to close the account in order to exclude that payment from the debt-to-income ratio (DTI). Going forward, revolving accounts that are paid down to zero at closing may remain open and no monthly payment needs to be included in the DTI ratio.
2. Conversion of Principal Residence Requirements: If a borrower is retaining their current primary residence and converting it to an investment property (while buying another primary residence) and wants to use any rental income from the property for qualifying, you are no longer required to have 30% equity in the property.
3. Stocks, Bonds, and Mutual Funds: One hundred percent (100%) of the value of the asset is allowed when determining available reserves. If the borrower documents that the value of the asset is at least 20% more than the funds needed for the borrower’s down payment and closing costs, no documentation of liquidation is required.
4. Funds to close: This is not a new change but just a reminder: For primary residence: all funds for closing (down payment, closing cost, prepaids, reserves) can be gift funds. Borrower is not required to make any contribution from their own funds. This is helpful when borrower does not have savings of their own. Many still think that at least 5% must come from borrower's own funds.
If you have any questions or would like to learn about additional changes giving borrower’s more flexibility when qualifying, please let me know.
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