A standard manually underwritten Fannie Mae file has a 44% total DTI. No special lower limit or exception applies. What must be documented to use the above-36%, up-to-45% DTI allowance?
Correct Answer
C) The applicable Eligibility Matrix credit-score and reserve requirements are met
C. Document the applicable credit-score and reserve conditions. The ordinary manual maximum is 36%; the stated allowance extends to 45% when the specified conditions are met. A 44% ratio is within that numerical range but does not establish compliance by itself. Scope and exceptions: Other eligibility and comprehensive underwriting requirements remain. Do not invent one universal reserve amount or substitute job tenure for the Matrix requirements. Government loans and special transaction types can use different limits. Source: Maximum DTI Ratios; Exceptions — https://guide-selling.fanniemae.com/sel/b3-6-02/debt-income-ratios
Why This Is the Correct Answer
C. Document the applicable credit-score and reserve conditions. The ordinary manual maximum is 36%; the stated allowance extends to 45% when the specified conditions are met. A 44% ratio is within that numerical range but does not establish compliance by itself. Scope and exceptions: Other eligibility and comprehensive underwriting requirements remain. Do not invent one universal reserve amount or substitute job tenure for the Matrix requirements. Government loans and special transaction types can use different limits.
Why the Other Options Are Wrong
Option A: Cite the 44% ratio itself, since it is under the 50% outer limit
It imports the DU maximum into manual underwriting.
Option B: Cite the appraised value, which secures the 44% ratio adequately
Collateral value does not replace these eligibility conditions.
Option D: Cite the borrower intention to pay, recorded in a signed letter
A promise to pay does not document credit score or reserves.
Exam Tip
A permitted ratio is conditional eligibility, not automatic approval.
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