New Rules Put Mortgages Within Reach for More Families | Emergency Preparedness | Forums

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Fannie Mae recently unveiled new rules that allow more borrowers to qualify for a mortgage. The change is aimed at encouraging homeownership among creditworthy lower-income and minority homebuyers, Fannie says in a press release.

Credit for nontraditional income sources

In a departure from traditional lending standards, Fannie’s HomeReady mortgage rules mean that if your income isn’t enough to get a mortgage you also could count the salary of an employed child, a parent or another relative who lives with you but whose name is not on the mortgage loan. (Check out “7 Tips to Help You Get Your Mortgage Application Approved” for help with applying for a mortgage.)

Parents and other relatives have been able to help their children buy a home in the past, but in different ways — by co-signing the mortgage, for example, or by giving them money to help with the down payment. (Zillow explains the rules for using gift funds toward your down payment.)

“For the first time, income from a nonborrower household member can be considered to determine an applicable debt-to-income ratio for the loan, helping multigenerational and extended households qualify for an affordable mortgage,” the press release says. Qualified borrowers can get a HomeReady mortgages with down payments as small as 3 percent.

Rental income counts

You also are allowed to count rental income from a boarder or someone renting an apartment attached to your home. Fannie did not say so, but, presumably, income from a nonrelative like a live-in partner to whom you are not married might also meet this standard.

In another break from tradition, you also can include income from someone who doesn’t live in your household — a parent or a grown child, for instance — to qualify for a mortgage.

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