Lenders Are Easing Mortgage Loan Requirements for First-Time Buyers

Since 2016, lenders have been slowly easing requirements for first-time homebuyers seeking a mortgage loan, including debt-to-income ratios, credit scores, and minimum down payments. 

Student loan debt has been an obstacle for first-time homebuyers applying for a mortgage loan. Previously, borrowers were qualified based on a monthly payment of 1 percent of the balance, even if this was not reflected on their credit report, per The Washington Post. Now, says Fannie Mae vice president of customer solutions John Lawless, “We allow lenders to use the actual amount being paid on an income-based student loan repayment plan. If a parent or an employer is making the student loan payments, we can even exclude that debt from the loan application, as long as we can see 12 months of documentation of those payments.”

“We are seeing thoughtful underwriting of loans and a greater understanding that younger first-time buyers are in a growth phase of their careers,” said John Pataky, executive vice president of the consumer division of EverBank in Jacksonville, Fla. “The approach is measured and guided, so we know that people becoming homeowners have the wherewithal to repay the loan as their income and career grow.”

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