10 Things That Will Improve Housing in 2021



$25K First-Time Home Buyer Grant


In July, the Downpayment Toward Equity Act of 2021 was introduced to the House of Representatives. If it becomes law, the bill could potentially make about 4.37 million renters eligible for a down payment of up to $25,000 at closing. That means that about 10% of the nation’s renters could own a home for the very first time—and they’d be able to afford a nicer one too.

Eligibility

Because it’s such a sweet deal, the eligibility is pretty narrow for applicants. Renters can’t have owned a home for three years, and their parents also can’t have been a homeowner for the past three years at the time of application. On top of that, renters need to be first-time home buyers, and they must earn less than 120% of the area median income.

For Miami-Dade and Broward counties, 120% of the area median income would be $70,920 and $73,080 respectively.

HUD Recalculates Student Loan Debt for FHA Loans


As of August 16, 2021, the U.S. Department of Housing and Urban Development (HUD) will be changing the standards of how student loan debt will factor into qualifying for a mortgage. The average college graduate has about $40,000 in student loan debt. For people who have had to put themselves through school, this is a huge setback to owning a home.


Check out the new student loan calculation rules to help first-time home buyers qualify for an FHA loan.


HBCUs Erasing Student Debt With Federal Funds


Using funds from the CARES Act, HBCUs are forgiving student loan debt. Over twenty HBCUs around the country have been using these funds to help their students pay off debt. With Black Americans trailing behind their white home owning counterparts by about 30%, the hope is that this will help narrow racial disparity in homeownership.


$10 Billion Homeowners Assistance Fund


If you or someone you know has been struggling to make ends meet since the pandemic began, have them apply for the homeowners assistance fund. Managed by the FHFA, in March, Congress set aside $10 billion in funds to help homeowners recover from financial hardship. Homeowners can use the funds to keep from falling behind on their mortgage, losing utility services, or going into foreclosure.

FHFA Kills Adverse Market Fee


In August of last year, the FHFA decided to add an adverse market fee to the refinancing process. Now, the FHFA has reversed that decision so that homeowners can take full advantage of low market rates.

The crazy part is that we weren’t in an adverse market. In fact, although we were going through a recession, mortgage rates had hit historic lows. Fees were raised because the previous FHFA director, Mark Calabria, wanted Fannie Mae and Freddie Mac to exit government conservatorship. I’m glad to see that the unnecessary rule was reversed, so that homeowners looking to refinance can get the most out of low market rates.


FHFA Expands Loan Limits


With home values rising across the country due to low inventory and supply bottlenecks, something had to give. That’s why the FHFA increased the conventional loan limit from $510,400 to $548,250. As home values increase, loan limits have to adapt. Had the loan limits not been expanded, many home buyers would be forced to ask for a jumbo loan in order to buy a home, and that would’ve made everything much more expensive.


New QM Rule


However, changes are coming to the QM rule. Back in December of 2020, the CFPB issued a final ruling that updated the current QM Rule. The new rule states that a new pricing threshold will replace the 43% debt-to-income limit. A price-based approach will give lenders relief for loans capped at 150 basis points (or 1.5%) above the prime rate.

Also, the new QM rule would eliminate the QM Patch. The QM Patch is a loophole that has allowed borrowers with high debt to income ratios (above 43%) to buy homes for years from Fannie Mae and Freddie Mac, giving them the advantage over other private lenders. With the QM Patch gone, other private lenders could compete with Fannie and Freddie, causing them to lower rates.


But keep in mind that this is a spoiler alert! The new QM rule is set to go into effect in 2022.

FHFA is Helping Homeowners Exit Forbearance

Back in June 2020, 8.6% of mortgages were in forbearance. About a year later, those statistics were cut in half as homeowners began to exit forbearance. The national forbearance rate was at 4.36% in May of this year, and currently hovers at 3.87% since June—a far cry from last year.

The FHFA's obsession with keeping homeowners housed has made it so that foreclosure rates will remain low.

$15,000 Tax Credit

Although not a law, the Biden administration did introduce a proposal for a $15,000 home buying tax credit. If approved, it would help first-time homeowners buy homes in a higher price range, and would help them make a down payment at closing

Fannie Mae Makes Home Buying Easier for Renters


In a recent turn of events, Fannie Mae has decided to add a new feature to its underwriting system to help qualify more renters for homeownership. With the borrower’s permission, Fannie Mae will use this new feature to analyze twelve months of a borrower’s past positive rental payment history. This is part of a new effort to make home buying more affordable for renters in lower income and credit households.

Since rental payments are a family’s largest expense, it makes sense that if you pay rent on time, that you should be able to qualify for a mortgage. Thankfully, only positive rental payment history will be taken into account when qualifying for a home. So you won’t have to worry about late payments or other negative rental payment history affecting your eligibility.


Renters Can Boost Their Credit by Properly Reporting Positive Rent Payments


For those who are credit invisible or who have poor credit, a great way to boost their credit score is to sign up with a third party provider that reports their positive rental payments to the three nationwide credit reporting agencies: Equifax, Experian, and TransUnion.


This, paired with Fannie Mae’s recent commitment to help more renters become homeowners is a sign that times are changing. Our government is starting to realize that home buying needs to become more accessible.