Maximum DTI Ratios
For manually underwritten loans, Fannie Mae’s maximum total debt-to-income (DTI) ratio is 36% of the borrower’s stable monthly income. The maximum can be exceeded up to 45% if the borrower meets the credit score and reserve requirements reflected in the Eligibility Matrix.
For loan casefiles underwritten through DU, the maximum allowable DTI ratio is 50%. If the DTI on a loan casefile exceeds 50%, the loan casefile will receive an ineligible recommendation.
See B3-1-01, Comprehensive Risk Assessment for information about the DTI.
Exceptions to the Maximum DTI Ratio
Fannie Mae makes exceptions to the maximum allowable DTI ratios for particular mortgage transactions, including:
- cash-out refinance transactions — the maximum ratio may be lower for loan casefiles underwritten through DU (see B2-1.3-03, Cash-Out Refinance Transactions);
- high LTV refinance transactions - except for loans underwritten under the Alternative Qualification Path, there are no maximum DTI ratio requirements (see B5-7-01, High LTV Refinance Loan and Borrower Eligibility
- borrowers who do not have a credit score — the maximum ratio may be lower for manually underwritten loans and DU loan casefiles (see B3-5.4-01, Eligibility Requirements for Loans with Nontraditional Credit);
- non-occupant borrowers — the maximum ratio is lower than 45% for the occupying borrower for manually underwritten loans (see B2-2-04, Guarantors, Co-Signers, or Non-Occupant Borrowers on the Subject Transaction); and
- government mortgage loans — lenders must follow the requirements for the respective government agency.
For additional information, see B3-6-02, Debt-to-Income Ratios.