Good morning, America! Today, we have some groundbreaking news that's set to boost the buying power for many of you. Fannie Mae has rolled out a new rule that significantly eases the way Social Security income is used for mortgage qualification.
Let’s dive into what this means for you!
Understanding the Big Change
Before we get into the nitty-gritty, let's understand the basics. Previously, if you were using Social Security income to qualify for a mortgage, lenders needed proof that this income was non-taxable. This documentation process was often a hurdle for many. But, hold onto your hats, because that’s all changed!
What’s New with Fannie Mae’s Rule?
Under the new guidelines, lenders can now automatically add 15% to your Social Security income as non-taxable, without any extra paperwork. The calculation involves grossing up 15% of the monthly Social Security benefit by 25%. So, for a $2,500 monthly benefit, an additional $90 (15% of $600, which is 25% of $2,500) is added, making the total income for mortgage qualification $2,590.
This boost can significantly enhance your borrowing power!
A Historical Perspective
To appreciate this change, let's take a brief walk down memory lane. The housing market has always been a cornerstone of the American dream, yet not always accessible to all. Past regulations often overlooked the unique financial situations of retirees and people with disabilities relying on Social Security. This change marks a pivotal moment in making homeownership more inclusive.
How This Impacts You
Whether you’re a retiree, a person with a disability, or anyone with Social Security income, this change opens new doors, literally.
It means higher qualifying incomes,
and more flexibility in choosing your dream home.
This change by Fannie Mae is more than a policy update, it's a beacon of hope for many aspiring homeowners. It reflects a growing recognition of diverse financial realities and a step towards more equitable housing opportunities.
How to Document Social Security Income
Retirement
Social Security Administration's (SSA) Award letter,
SSA-1099,
Most recent signed federal income tax returns (or tax transcripts3), or
Proof of current receipt
SSA Award letter,
Proof of current receipt, and
Three-year continuance4
Disability
SSA Award letter,
SSA-1099,
Most recent signed federal income tax returns (or tax transcripts3), or
Proof of current receipt
SSA Award letter,
Proof of current receipt, and
Three-year continuance4
Survivor benefits
SSA Award letter,
Proof of current receipt, and
Three-year continuance4
Supplement Security Income (SSI)
SSA Award letter, and
Proof of current receipt
Your Next Steps
Ready to see how this impacts you? As an American mortgage broker, I’m here to guide you through these exciting times. Let’s calculate your new purchasing power and explore the best mortgage options available for you.
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