Here is a major FNMA announcement that goes into effect on August 1 2008.

Probably the most critical part of the announcement effects those sellers that are planning on keeping their existing home as a rental and buying another property.

The new guideline states that if a seller wants to keep their existing home as a rental when they purchase another home the following applies:

1. A copy of a fully executed Rental Agreement.

2. A copy of the receipt of a security deposit from the tenant and deposit into the borrower’s account.

3. There must be 30% equity in the existing property documented by an appraisal.

If all these are satisfied FNMA will continue to permit up to 75% of the rental income to offset the mortgage payment.

If they do not meet these guidelines rental income may not be used to offset the mortgage payment and both the current and proposed mortgage payments must be used to qualify the borrower and they must have 6 months PITI reserves for both properties.

This will have a huge effect for those that were planning on keeping their existing homes as rentals waiting for prices to come back.

If you have any buyers sitting on the fence the better move now before this goes into effect on August 1 2008.

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