Just when you thought it couldn’t get any harder to qualify for a home loan …

FannieMae announced on September 29th, 2009 (yeah, I guess I’m late to the party) that effective December 12th, 2009 they will be reducing the debt to income ratio (DTI) requirement to 45 percent “with flexibilities up to 50 percent for certain loan casefiles with strong compensating factors.”

What this means is that for those folks that were barely qualifying for a mortgage before due to credit card balances, car loans, department store debt, etc. will now be blown out of the home-buying market for sure.

What can you do?  Pay off those loans!  Get rid of your personal debt if you want to qualify for a home loan after December 12th.  Not that that’s a bad idea anyway!

Take note, rent payments toward your current place of residence, utility bills, or other bills incurred towards your current home do not count towards your DTI … It’s the personal debt (credit cards, etc) that we are talking about here.  I believe child and spousal support also counts (let’s NOT gyp your kids to get into a house!).

So don’t worry about that expiring tax credit – offer $8000 less on the property for immediate gratification! – and start worrying about your finances!  Get your ducks in a row, talk to a good mortgage broker/banker, and get to shopping for that home you’ve always wanted … Just make sure your eyes aren’t bigger than your wallet!