Millennials saddled with student loans and other debts may have a hard time meeting the 43 percent debt-to-income ratio limit under the new “qualified mortgage” regulations that took effect in January, NAR research economist Gay Cororaton writes.

Even assuming their income grows at 5 percent a year, it could take 21- to 30-year-olds seven years to qualify for a mortgage that meets QM’s DTI standards. Realtors may need to work with younger buyers to explore financial options and alternatives such as rentals, rent-to-own, or mortgage assumptions, Cororaton concludes.

BUT … it’s worth noting that for now, loans eligible for purchase by Fannie Mae and Freddie Mac aren’t subject to the DTI limits. Although the mortgage giants will no longer buy loans that don’t meet the QM “ability to repay” rules, Bloomberg Businessweek economics editor Peter Coy has noted that the 43 percent DTI limit doesn’t kick in for Fannie and Freddie loans until 2021.

By then, non-QM mortgages should be readily available from private lenders, although they will presumably carry higher rates. Source: realtor.org.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×