The New Conforming Mortgage Guidelines, Effective September 1, 2009

As a reminder, Fannie Mae is rolling out new lending guidelines Tuesday, September 1, 2009. 

Starting next week, being approved for a home loan could be much more difficult.

The new rules mark the first major underwriting update since April of this year.  The changes are mostly geared at fraud prevention.

Among the updates:

1. Stock options are no longer eligible for “reserves”
2. Relocating families can’t use the “trailing” spouse’s projected income
3. “Tip” income must be documented and verified
4. Lenders must call employers to verify employment
5. Lenders must verify tax transcripts against IRS records

But there are other changes, too.  As examples:

1. Owners and buyers of 2-unit homes are subject to new minimum FICOs with larger downpayment and equity requirements.
2. Only 70% of stock, bond and mutual values may be used as reserves
3. Only 60% of retirement assets may be used as reserves

Consider this post to be your advance warning. Not everyone that qualifies for a mortgage on Monday, August 31 will qualify on Tuesday, September 1. 

Therefore, if you have a pending need for a mortgage — for either a purchase or a refinance — it’s probably best to talk with a lender as soon as possible.  The deadline is based on the date of application — not the date of closing.

Read the complete Fannie Mae announcement online.