Fannie Mae Automated Underwriting System Approval: Housing Expenses

If you are interested in purchasing a new home, you will first need a pre-approval from a mortgage lender to see what amount of mortgage loan you qualify for.   Your mortgage lender will require to see your income, assets, and liabilities.  Your mortgage lender will then run a credit check to see your credit history and see what your credit scores are.  There are two ratios that your mortgage lender will need to see and see whether you qualify for a mortgage loan program.  The first ratio is called the front end ratio or the housing ratios.  The front end ratio is your total monthly housing expenses which are your principal and interest of your mortgage payment, your annual insurance premium divided by 12, your private mortgage insurance premium if it is a conventional loan and if you have less than 20% down payment or your monthly mortgage insurance premium if it is a FHA insured mortgage loan, your property taxes divided by 12, and your homeowners insurance premium divided by 12.  If your house is located in a community where there is homeowner association dues, that will be calculated as part of your monthly housing expenses.  The front end ratios is calculated by dividing all of your monthly housing expenses by your total monthly gross income.  The maximum front end housing ratio that Fannie Mae Automated Underwrtiting System will allow for a FHA insured mortgage loan is 46.9%.  The back end ratios is calculated by dividing the total expenses including the housing ratios as well as automobile payment, student loans, minimum credit card payments by your gross month income.  The total back end ratios allowed for a Fannie Mae Automated Underwriting System mortgage loan approval for a FHA insured mortgage loan is 56.9%.

Fannie Mae Automated Underwriting System Approval; Approve/ Eligible Per DU Findings

Getting a Fannie Mae Automated Underwriting System approval is key.  Fannie Mae Automated Underwriting System is like a super brain that will take everything about a mortgage loan borrower into account.  The Fannie Mae Automated Underwriting System will take the income, assets, liabilities, credit report, credit history, derogatories, employment history, and every aspect of the mortgage loan borrowers information into account and will either issue an approve/eligible or a mortgage loan denial.  The AUS will determine how many years tax returns is required and whether the mortgage loan borrower needs verification of rent.  The AUS will also take into account gift funds for down payment and might even reject a mortgage loan borrower with good credit and good income but has limited assets.

If I get A Fannie Mae Automated Underwriting System Approval, Am I Assured A Mortgage Loan Approval?

Many mortgage lenders have their own internal overlays.  Overlays are additional requirements on top of the Fannie Mae Automated Underwriting System approval.  However, I represent dozens of wholesale mortgage lenders that have no internal overlays and as long as you get a Fannie Mae Automated Underwriting System approval, the chances are that I can get you a formal mortgage approval and a clear to close if you can provide and verify all of the information stated on your formal mortgage application.  If you are interested in applying for a mortgage loan, please contact me at 262-716-8151 or visit me at www.gustancho.com .  I am available 7 days per week.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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