Brief Fannie Mae Raises the DTI Limit
A Win for Expanding Access to Credit
Edward Golding, Laurie Goodman, Jun Zhu
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In May, 2017, Fannie Mae announced that it will allow mortgage borrowers to take on a little more debt, increasing the debt-to-income (DTI) cap from 45 to 50 percent. This brief estimates that this change will allow around 95,000 new mortgages to be approved annually, a disproportionate percent of which should go to black and Latino families. The brief also determines that this expansion comes with very little risk and cost to taxpayers. The move to a 50 percent DTI is, thus, an important step to opening the credit box without appreciably increasing costs or risks for Fannie Mae.
Research Areas Wealth and financial well-being Housing finance
Tags Single-family finance Agency securitization Financial products and services Finance
Policy Centers Housing Finance Policy Center