Hi Ratio mortgages will be qualified at 4.64%, 25 year amortization maximum. This is the stress test. Borrowers will find that they qualify for about 20% less than they did two weeks ago. Larger down payments and family co-signers will become the way to go. Borrowers will be paying historically low rates, just qualifying using higher ones.
Back end insured mortgages (currently many lenders raise mortgage funds on the bond market by selling blocks of insured mortgages) will fall under the same rules. This means that conventional mortgages from lenders other than banks and credit unions, will also qualify borrowers based on 4.64%, 25 year amortization. This takes effect November 30, 2016
Insurers are looking at ways of having lenders share more of the risk (deductibles, larger reserves) which will drive up mortgage costs. The details on this are yet to come out
Any transaction that was entered into before October 17, 2016 will fall under the old rules, anything written after that date is subject to the new guidelines.
Talk to us is you have something coming up and you are concerned about qualifying.