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Qualifying the Borrower

This document shows you the Qualifying the Borrower screens and explains how to enter some of the data. 

You may scroll through this document, or click a link to be taken to the information for the specified field:

Qualifying the Borrower - Minimum Required Funds or Cash Back

Mortgage Loan Details

Credit Details

Calculated Totals

Qualifying the Borrower - Minimum Required Funds or Cash Back

Here are the notes for the following fields:

Field Name 

Notes

A. Sales Contract Price
  • When entering the Sales Contract Price the property’s sales price must be adjusted downward to reflect any Interested Party Contributions that exceed the limit specified in the Fannie Mae Selling Guide. Refer to the Excess Interested Party Contributions job aid for additional information.

B. Improvements, Renovations, and Repairs
  • When entering an amount in Improvements, Renovations, and Repairs, the loan casefile will not be underwritten through DU as a HomeStyle Renovation mortgage, unless you also indicate that the transaction is a Renovation loan in section L1. Property and Loan Information.

    Refer to the HomeStyle Renovation & HomeStyle Energy job aid for additional guidance.

C. Land Value using
  • The options for this field are Appraised Value of Lot, Not Applicable, and Original Cost of Lot. The amount is entered in the applicable field on the L1. Property and Loan Information screen. 

D. Balance of Mortgage Loans on the Property to be paid off in the Transaction
  • Only subject property liens paid by closing should be included on Balance of Mortgage Loans on the Property to be paid off in the Transaction (line D.).
  • The balance entered on line D. should match the balance of the mortgage(s) being paid off with the transaction.
  • A PACE loan or energy improvement loan should not be included on line D. on a limited cash out refinance transaction. 

E. Credit Cards and Other Debts Paid off
  • On a cash-out refinance any accounts being paid off that are not a subject property lien should be included on Credit Cards and Other Debts Paid off (line E.). 
  • On a limited cash-out refinance this field should not be used – any accounts being paid off that are not a subject property lien will be added to required funds as they cannot be paid as part of the transaction.

F. Borrower Closing Costs and Estimated prepaid items
  • When entering the Borrower Closing Costs and Estimated prepaid items the FHA Upfront Mortgage Insurance Premium or VA Funding Fee should not be included in the value(s) provided.  For information about how to enter mortgage insurance for government loans refer to the FHA Loan job aid and the VA Loan job aid.
  • Contracted cost overruns on two-closing construction-to-permanent transactions that occurred outside of the interim construction loan should be included in the value(s) provided. 

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Mortgage Loan Details

Notes: The balance entered on the Other New Mortgage Loans on the Property the Borrower(s) is Buying or Refinancing (line J.) should match the total subordinate lien balance entered in section 4b. Other New Mortgage Loans on the Property You are Buying or Refinancing. 

For any new HELOC(s) associated with the transaction, the balance entered on line J. should only include the drawn portion of the HELOC(s).

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Credit Details

 

Note: The calculated total displayed in the M. Other Credits (Purchase Credit Types and Lender Credit) Total field includes the Other Credits that were entered in section 2b. Credits.

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Calculated Totals

The information displayed in theL4.Calculated Totals section is automatically calculated for you based on the data input in the Qualifying the Borrower – Minimum Required Funds or Cash Back, Mortgage Loan Details, and Credit Details sections of the loan application.

Note: The amount displayed in Cash From/To the Borrower can be different than the Funds Required to Close amount on the DU Underwriting Analysis Report. For example, on a limited cash out refinance transaction the balance of an installment debt marked To be paid off at or before closing in 2c. Liabilities - Credit Cards, Other Debts, and Leases that You Owe is not included in the amount displayed in Cash From/To the Borrower, but the balance will be included in the Funds Required to Close because an installment debt can't be paid off with a limited cast out refinance transaction. 

 

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