The housing market crash forced lenders everywhere to tighten up their standards. That resulted in a number of consumers, particularly young people, to become ineligible for a mortgage. Realizing that millennials are the key to growth in the housing market, many lenders such as Fannie Mae are now loosening up their standards a bit. Here is an overview of some upcoming changes, as well as their anticipated effects.

Debt-to-Income Ratio Changes

The homeownership rate for those under 35 is at its lowest level in decades. One reason is that millennials in particular are often plagued with student loan debt that can prevent them from becoming qualified for a mortgage. This is one reason Fannie Mae plans to increase the Debt-To-Income (DTI) ratio from 45% to 50%. A person’s DTI ratio is his or her debt payments divided by monthly income, and includes all types of debt including student loans. read more