Mar 21, 2022 2022-04

New maximum allowable DTI guideline for non-occupying co-signer(s)

This memo provides further clarification and guidance about MFA’s maximum allowable borrower debt-to-income ratio (DTI) and provides details about the upcoming implementation of a maximum allowable DTI for non-occupying co-signer(s) (hereinafter referred to as co-signer(s)).

The borrower DTI overlay of 50.00% was originally announced in Lender Memo 2020-28 and implemented January 11, 2021. This overlay remains in effect.

MFA allows lenders to utilize co-signer(s) to guarantee repayment of MFA mortgage loans. Co-signer(s) will only sign the Note and will not be allowed to take an ownership interest in the property.

It is imperative that co-signer(s) have the financial capacity to not only service his or her own debts, but also, should the need arise, those which were cosigned for the borrower.

Therefore, MFA has established a maximum DTI guideline of 55.00% for co-signer(s). This rule will apply to transactions with an URLA date of April 1, 2022, or later.

The DTI percent is based on the lender’s qualifying income calculation and must include all individual debt and co-signed obligations, including the mortgage(s).

These overlays help ensure that borrowers have the capacity to service all debt obligations, including their mortgages. It is critical to our mission that borrowers are as well-equipped as possible to become long term, successful homeowners.

These DTI maximum percentages will remain in effect until further notice. No exceptions will be granted.

Should you have questions please contact a member of the homeownership department at 505.843.6880.

Thank you for participating in MFA programs.