Guideline changes that increase buying power

Mortgage broker: Liz Bayer, ProMortgage.

Property type: Single-family home in Novato. Appraised value: $1 million. Loan amount: $700,000 Loan type: 30-year fixed. Rate: 4.375 percent. APR: 4.478 percent. Backstory: I had preapproved a client for a loan of $625,000. However, the price point that he ideally wanted was out of reach until Fannie Mae updated their guidelines.

Previously, when a W2’d income person files a Schedule 2106 with their tax return to deduct “non-reimbursed” expenses, the lender would also deduct this from the borrower’s income, which lowered the qualifying loan size.

So just in the nick of time, Fannie Mae guidelines changed so that the 2106 would no longer be deducted in computing income. This directly increased his buying power. So, with this guideline change, the recent drop in rates and the conforming loan limits increasing in 2019 to $726,525, my borrower was able to qualify for a $700,000 loan and purchase his dream home.