A lender originates a $400,000 conventional loan that meets all GSE guidelines except it has a 45% debt-to-income ratio when the maximum allowed is 43%. This loan would be classified as:
Correct Answer
B) Non-conforming due to exceeding DTI requirements
A loan is only conforming if it meets ALL GSE eligibility criteria, including underwriting standards. Exceeding the maximum debt-to-income ratio makes this a non-conforming loan, even though the loan amount is within conforming limits.
Why This Is the Correct Answer
A loan is only conforming if it meets ALL GSE eligibility criteria, including underwriting standards. Exceeding the maximum debt-to-income ratio makes this a non-conforming loan, even though the loan amount is within conforming limits.
More Mortgage Knowledge Questions
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An MLO receives an application where the borrower provides their gross monthly income as $8,000 but later clarifies this represents their annual income, not monthly. The borrower's actual monthly income is $667. How should the MLO handle this situation regarding the application date?
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A borrower earns $6,500 monthly and has the following debts: proposed PITI $1,800, car payment $450, credit card minimum $200, student loan $300. What is their back-end DTI ratio?