Homeowner readiness

December 30, 2013

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Buying a home is one of the biggest steps in life, and many agree that being a homeowner is part of the American dream. However, if you've been a renter your whole life, buying a home is no easy process. Here are a few signs that you're ready to make the transition and buy a home:

You've got the budget
Buying a home can be costly, even with a mortgage, so it is important to have the budget and some skills for managing money. With mortgage payments, insurance and closing costs, buying a home can come with new expenses that require a little bit of expertise when it comes to budgeting. If you don't already have a budget for your monthly expenses, start making one by tracking how much you spend each month.

Using this, draft a homeownership budget that will help you figure out exactly how much you can spend on a new home purchase. Look for homes and find out how much you could afford in mortgage payments each month, but don't forget about utility bills, property taxes, homeowners association fees and maintenance costs. If you are able to put together an affordable budget for all these expenses, then you might be in a good position to buy a home.

Down payment
With almost any home loan, you will be required to make a down payment. Some lenders will require a 20 percent down payment for jumbo loans, but for many first-time home buyers, that is far too much. Fortunately, there are other options with lower down payments. Low cost mortgages guaranteed through the Federal Housing Authority only require a down payment of around 3.5 percent, while VA home loans don't have any requirement. Instead, eligible veterans are qualified through their service and type of duty. Depending on your financial situation, a lower down payment may help you afford a more expensive home. Be sure to factor in the cost of a down payment when thinking about becoming a homeowner.

Income
When buying a home, it is essential that an owner has a steady and reliable source of income. A home is a long-term investment and will require monthly payments and extra expenses. If there are upcoming changes in your life like a return to school, the start of a family or a change in job, you may want to rethink buying a home until there is a stable source of income.

Credit rating
When applying for a mortgage, a lender will take a hard look at your credit score. As an indicator for what type of borrower you are, your credit rating is one of the most important qualifications for getting approved for a home loan. While there are some options to get a loan for those with low credit scores, you will be more likely to get better terms with a high rating. To give yourself the best chance of getting a low cost mortgage, maintain a good credit score by making payments on time, not having too many credit cards and keeping balances low. If you have a low credit score, work on raising it before you consider buying a home or search for other options like FHA mortgages, which have different lending standards.

Contact the Federal Savings Bank, a veteran owned bank, to explore affordable mortgage options for homeownership.

https://www.thefederalsavingsbank.com/Advice/Homeowner-readiness

New mortgage changes favor jumbo loans

December 27, 2013

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Starting Jan. 10, new mortgage changes will go into effect. For the most part, the changes are designed to ensure that borrowers will be able to pay back their loans. As a result of the recession, the new restrictions are meant to prevent another housing collapse from happening.

Some of the new rules affect adjustable-rate mortgages, where they must now be written with the highest possible payment. Loans may not have interest-only features, have high fees or have a debt-to-income ratio higher than 43 percent. For many, the last stipulation is one of the biggest changes, but it will help provide the mortgage market with more stability. If new loans meet these new rules, they are considered to be qualified mortgages and lenders are protected from legal action if borrowers default.

Jumbo loans favored
While many mortgages currently getting approved already would be considered qualified mortgages, adjustable-rate mortgages are gaining in popularity amid rising interest rates. The changes however, are not mandatory for all types of loans and lenders have stated they will still offer jumbo loans without the new rules. This has some speculating that the new mortgage changes favor wealthy borrowers who are likely to take out larger, adjustable-rate mortgages. For first-time home buyers - who typically apply for conventional mortgages - the changes in favor of jumbo loans and ARMS could leave some without as many options.

"The buyers that are out there are much more affluent," Raymond James analyst Buck Horne told CNBC. "They have much larger home savings and home equity saved up, and they're looking for a larger type of house. The first time buyer, unfortunately, remains pretty well locked out of the market."

Contact the Federal Savings Bank, a veteran owned bank, to find a low rate mortgage.

https://www.thefederalsavingsbank.com/Advice/New-mortgage-changes-favor-jumbo-loans

Christmas mortgage market

December 27, 2013

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Following the Christmas holiday, economic indicators revealed that the housing market is looking up heading into next year.

Mortgage rates
Just a week after the Federal Reserve announced it would begin tapering its quantitative easing program by $10 billion per month in January, mortgage rates were little changed. According to Freddie Mac, mortgage rates for a 30-year fixed-rate loan rose slightly to 4.48 percent during the week ending on Dec. 26. Last week, mortgage rates averaged 4.47 percent. Compared to a year ago, mortgage rates have increased from a historic low average of 3.35 percent.

Mortgage rates for a 15-year fixed-rate loan also increased to 3 percent, up from 2.96 percent the week before. During the same time last year, interest rates were around 2.65 percent. Most expect interest rates to rise above 5 percent when the Fed begins to reduce stimulus spending next month, but for now it appears mortgage rates are holding steady. While interest rates have risen over the last year, many Americans are still able to find affordable housing and low cost mortgage options.

"Mortgage rates were little changed this week following mixed economic reports," said Frank Nothaft, Freddie Mac's chief economist and vice president. "Real GDP was revised upwards to 4.1 percent growth in the third quarter of this year. However, existing-home sales dropped 4.3 percent to a seasonally adjusted annual rate of 4,900,000 in November. Also, new home sales fell 2.1 percent to a seasonally adjusted annual rate of 464,000."

While home sales fell slightly in light of higher mortgage rates, it is possible the drop was from seasonal changes in real estate trends. Home sales typically slow in the fall and winter, while more real estate transactions occur during the spring and summer.

Home sales
One indicator that higher interest rates are able to be absorbed by homebuyers is home sales. According to the Wall Street Journal, home sales did their best since the middle of 2008 in October and November of this year after mortgage rates dropped from September highs.

While the Federal Reserve has kept interest rates low with its fiscal policy, stronger economic reports show that higher rates may not have such a negative effect on the housing market. For one, jobless claims dropped in 45 states by 42,000 to a rate of 338,000, according to the Department of Labor. Fewer jobless claims is a good sign for the economy, as the number of Americans who applied for unemployment benefits fell to its lowest level in over a month. An improved labor situation will be beneficial for the housing market, as more people will be able to make a new home purchase.

A reduced rate of unemployment was one major reason the Fed decided it would begin to reduce stimulus spending. In November, the national unemployment level dropped to 7 percent, down from 7.3 percent the previous month. The number of jobs added to the economy in 2013 reached more than 2 million, representing the fastest rate of growth since 2005.

Contact the Federal Savings Bank, a veteran owned bank, to find out more about affordable mortgage options. 

https://www.thefederalsavingsbank.com/Advice/Christmas-mortgage-market

Getting the right mortgage for your credit score

December 26, 2013

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When it comes to getting a mortgage, lenders will take a hard look at your credit score to determine what type of borrower you are and what loan you might be qualified for.

After the recession hit and millions of homeowners fell into default on their loans, lenders tightened borrowing requirements, including those pertaining to credit scores. For a lot of potential homebuyers, this made it harder to get approved for certain types of mortgages. Fortunately, there are several different types of loans for Americans, and having less than perfect credit doesn't have to stop borrowers from getting a mortgage and buying a home.

VA home loan
For eligible veterans, a home loan guaranteed through Veterans Affairs is a great option that usually doesn't even have a credit requirement. Instead, VA home loans are based on length and type of service and duty. These loans also require very little down payment, if any at all, making them a very affordable option for veterans.

FHA loan
A home loan through the Federal Housing Administration is also a good alternative for someone with a lower credit score, as these lending standards are slightly looser than those for private mortgages. In addition, FHA mortgages also require a down payments as low as 3.5 percent, giving homeowners more options when it comes to their finances. However, FHA mortgages also require another fee, which can add to a monthly payment. For this reason, some borrowers decide to apply for a different type of loan.

Raise your credit score
Of course, another way to increase your options for getting a low cost mortgage is to raise your credit rating and score. In order to do this, you should first request a free copy of your credit report and check for any mistakes that could affect your score. It is important to note that your credit score may not come with your free report, but you can request a score for an additional fee. Credit scores are affected by the available balance, how much credit you have, types of credit and credit history. Payment history is a big portion of credit scores and late payments can have a negative impact on scores. To ensure your rating isn't affected, make all payments on time and try to reduce the balance you owe.

Contact the Federal Savings Bank, a veteran owned bank, to explore low rate mortgage options.

https://www.thefederalsavingsbank.com/Advice/Getting-the-right-mortgage-for-your-credit-score

Overcoming refinance hurdles

December 24, 2013

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When mortgage rates fall, many homeowners jump on the chance to reduce their monthly mortgage payments by refinancing their home. While this is a great option for many and can drastically improve affordability, there are sometimes hurdles that homeowners face when going through the mortgage refinance process.

Loan-to-value ratio
The LTV ratio is the amount of the loan against the value of your home as a percentage. If your home is worth $100,000 and your loan amount is $60,000, the LTV ratio is 60 percent. Many lenders restrict the LTV ratios, though having a high ratio doesn't mean you won't be able to refinance.

Some borrowers with high LTV ratios will try to lower the figure by paying off a large part of the mortgage. This will reduce the size of the loan and reduce the amount owed against the value of the home. Other homeowners will refinance with higher LTV ratios, but they will have to get mortgage insurance to cover the cost owed to the lender in the case of default.

It is possible to refinance with a high LTV ratio through the Federal Housing Authority if you already have an FHA mortgage. Someone with a VA home loan can also refinance with high ratios and without having to get mortgage insurance.

Credit score
Lenders take a hard look at credit scores when determining mortgages and refinancing. If your credit score is too low, it may not qualify you for new loan terms. To make sure you are eligible for the best mortgage refinance rates, you can try to boost your credit score responsibly. It is important to note that it may not be possible to change your credit rating overnight. You can improve your score by making payments on time, paying off large balances and having only a few credit cards.

For eligible veterans, having a credit score that is less than pristine may not affect refinance or loan qualifications, as VA home loans are usually based on type of service and length of duty rather than financial requirements.

Equity
Lenders will typically want a homeowner to have at least 5 percent equity in their home before they approve a refinance, though others may say at least 20 percent is required. During the recession, this presented a large problem to many homeowners who lost equity in their properties after the housing market collapse.

For homeowners without enough home equity, there are still other options. For those who qualify, VA home loans or mortgages through the FHA require much lower standards for home equity when it comes to refinancing. VA home loans don't have any requirement at all, while FHA loans are lower than other types of loans. The Home Affordable Refinance Program, also known as HARP, is another choice not all homeowners are aware of. It is possible to refinance with HARP, even if you have negative equity.

Contact the Federal Savings Bank, a veteran owned bank, to explore mortgage refinance rates.

https://www.thefederalsavingsbank.com/Advice/Overcoming-refinance-hurdles

Dos and don'ts of the mortgage process

December 23, 2013

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When it comes to the home loan process, applying for a low rate mortgage can take a while. To make sure your application is approved quickly and efficiently, check out these dos and don'ts of the process:

Do:

• Ask your loan officer questions

Don't be afraid to ask your loan officer questions about the terms of the home loan. When you are making a new home purchase, there are a lot of costs that will come up that buyers will have to pay for. Be sure to ask what other costs may be associated with a home loan, as well as finding out what you can afford. Speaking with a loan officer before you apply for a mortgage will help make sure that you can be approved faster.

• Provide accurate and detailed information

When you apply for a loan, you will have to fill out pages of personal and financial information. To avoid delays or committing fraud, it is important to provide accurate information and be as detailed as possible. If you don't fill something out, it may take longer to process your application, as your loan officer may have to spend time trying to get the information from you.

Since the recession, loan applications have increased in size, as lenders want to collect more financial information to ensure that borrowers will be able to afford these mortgages. While this may seem off-putting to some borrowers, it is the best way to avoid getting a mortgage that could put homeowners at risk of falling into default or foreclosure.

• Know the loan terms

It is crucial that you know the interest rate, length of the loan and the total balance of the loan before you sign anything. Knowing all these terms will help you understand how much you will have to pay per month on your mortgage. 

Don't:

• Lie on your application

One of the biggest mistakes a borrower can make is lying on their application. While risk assessment standards have gotten stricter over the years, lying on your application could result in getting a loan that you cannot afford. Some borrowers will lie about how much income they receive or not report any other financial assets they have. Lying or not reporting all financial information could also result in more serious consequences including fraud. 

• Start a loan process when you won't be available

Home loan processes take time and it is best for a lender if you are available while your application is under review. If you apply for a home loan and then leave the country for a few weeks, your loan could take a lot longer to approve. Sometimes lenders will need to get crucial information from you. If you aren't available, they might not be able to finish the process. To ensure that your application is completed as quickly as possible, be sure that you are reachable through phone or email immediately following.

• Make major financial changes

Lenders will be looking at your financial records when approving loans. Any major changes could result in delays for processing times. When you apply for a loan, do not change jobs, cancel or open credit cards or make any huge purchases. If you have credit card debt, it is best to wait to buy more expensive items, as big changes in you balance can disrupt what a lender sees. Canceling credit cards also won't help in terms of your credit rating. Canceling cards can also affect the ratio of debt to available credit and you may find yourself unqualified. In general, it is best to keep your finances at about the same level after you apply for a loan.

Contact the Federal Savings Bank, a veteran owned bank, to find out more about affordable mortgage options.

https://www.thefederalsavingsbank.com/Advice/Dos-and-donts-of-the-mortgage-process

Federal Reserve sets January tapering date

December 20, 2013

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Immediately following the conclusion of their December meeting, Federal Reserve officials announced the central bank will begin to taper its stimulus spending by $10 billion per month. For borrowers who have been enjoying a low rate mortgage, the news will likely impact mortgage rates next year.

Under its current rate, the Fed is purchasing $85 billion in U.S. Treasury bonds per month in an effort to keep interest rates low and encourage economic growth. Since the economy has shown major signs of improvement, including the November employment report, Fed officials believe it will soon be able to sustain growth on its own going forward. 

Economic improvement
Stimulus spending, known as quantitative easing, will be reduced to $75 billion per month beginning the first month of 2014. Fed officials have previously stated they would not begin to reduce spending until unemployment reached 6.5 percent or lower and inflation was above 2 percent. While neither of those goals have been met, there are signs the economy will meet them next year.

According to the November jobs report released by the Department of Labor, the unemployment rate dropped to 7 percent, down from 7.3 percent from the previous month. Additionally, 204,000 non-farm payroll jobs were added to the economy, a sign of progress Fed officials were hoping to see. Many economists are pleased by the decision, as the rate of spending by the Fed is unsustainable in the long run and has kept mortgage rates artificially low.

"I think it logically, this is what they had to do," David Kelly, JP Morgan Funds' managing director, told CNBC. "If you look at what's happened this year, the unemployment rate has come down to 7 percent. We've got housing starts over a million units. We got the S&P 500 up 25 percent. In this economy, you have to pull back from the most extreme monetary policy in a century. So I think it's overdue. I'm glad to see it."

Mortgage rates
One effect of the taper will be on borrowers. Mortgage rates are likely to rise as the Fed decreases its bond-buying, with some economists guessing the rate for a 30-year fixed mortgage will rise above 5 percent. This time a year ago, interest rates averaged 3.36 percent. However, as the housing market has improved significantly over the last year, with home prices and sales growing quickly, borrowers will likely be able to absorb higher interest rates.

Rising rates may in fact be a good sign for the overall economy, proving that it is strong enough to handle them. Certainly, Fed officials believe the economy will be strong enough to stand on its own very soon. The January reduction in stimulus spending is merely the first step.

"The Fed is finally signifying to us the economy is doing better," Bob Doll, Nuveen Asset Management chief equity strategist, told CNBC. "2014, the economy will be a bit stronger, a bit broader and this is just confirmation of it."

Contact the Federal Savings Bank, a veteran owned bank, to find a low rate mortgage.

https://www.thefederalsavingsbank.com/Advice/Federal-Reserve-sets-January-tapering-date

Fixed- vs. adjustable-rate mortgages

December 19, 2013

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When getting a mortgage, borrowers have several different options - from FHA mortgages to jumbo loans and more. However, the primary categories of mortgages have to do with interest: Fixed and adjustable-rate loans. Choosing the right type of home loan often depends on the borrower and what they plan to do with their home. There are advantages to getting both types of mortgages, though many first-time home buyers will usually invest in a fixed-rate mortgage.

Fixed rate
A mortgage where the interest rate does not change over the life of the loan is called a fixed-rate mortgage. The rate is usually locked in at the beginning of the term and reflects the amount of paid interest that is owed. Homeowners with a fixed-rate mortgage aren't affected by mortgage market fluctuations. Though the interest stays the same, the length of the loan is typically 15, 20 or 30 years.

One advantage of a fixed-rate mortgage is that homeowners are able to know what their mortgage payment will be every month for the entirety of the loan. This can help homeowners budget their expenses and plan ahead. The loan term is also simple to understand for a lot of homeowners compared to an adjustable-rate mortgage.

However, there are some disadvantages to a fixed rate as well. When mortgage rates fall, homeowners are locked into their terms unless they refinance. A mortgage refinance can cost a few thousand dollars for homeowners and can take some time. If mortgage rates have changed dramatically, refinancing can save a homeowner a great deal over the life of the loan. If the term of loan is soon ending, it may not be worth it to refinance, as the costs may be more than the potential savings of having a lower rate.

Adjustable rate
In contrast to a fixed rate, adjustable-rate mortgages do change depending on market conditions. Borrowers generally are given a low interest rate for the first year or two on the home loan, and the rate will increase over time.

Many borrowers find ARMs attractive, as the interest rate at the beginning of the loan is generally well below a fixed rate. For homeowners who plan to stay in their house for only a short time, adjustable-rate mortgages can be less costly than fixed-rate terms. Homeowners can also take advantage of falling rates without needing to refinance. Because the interest rates are usually very low, adjustable-rate mortgages may also allow a homebuyer to purchase a more expensive home they wouldn't be able to secure with a fixed-rate loan.

However, it is possible that the interest will rise above fixed rates. Homeowners will have to change their budgets month to month when interest rates and mortgage payments change. These types of loans are also more difficult to understand for many borrowers, as lenders have more flexibility in drafting terms.

Contact the Federal Savings Bank, a veteran owned bank, to find out more about affordable mortgage options.

https://www.thefederalsavingsbank.com/Advice/Fixed-vs-adjustable-rate-mortgages

Home prices in 2014

December 18, 2013

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As millions of Americans have enjoyed the opportunity to get a low rate mortgage for the last few years, the end of 2013 has many wondering what the housing market will look like next year.

Year in review
Home prices have seen a rapid appreciation in many regions in the country, in part due to a low inventory and investor interest. When home prices bottomed out during the recession, many residential investors took the opportunity to snag properties at low prices and eventually helped the housing market stabilize. Now that prices are returning to normal levels, investors have begun to pull back their purchases as they are no longer able to find the same deals.

For regular homebuyers, this may be beneficial. First-time home buyers in particular have a hard time competing with residential investors who may make all-cash offers. For sellers, all-cash offers are tough to refuse. Higher home prices may actually help first-time homebuyers close a deal.

Prices in certain cities spiked, causing some to wonder whether they were entering into bubble territory. California was one state that had many cities experience huge growth month to month. While sales remained strong throughout the year, the National Association of Realtor's Housing Affordability Index reached its lowest point in five years.

2014 predictions
Many real estate professionals have recognized that the housing market has made great strides in 2013 and expect the trend to continue heading into next year. However, the pace of growth and price appreciation will not be the same.

The NAR also predicted that home sales would reach 5.12 million for 2014, though price growth will slow to about half its 2013 pace. For the housing market, slower and steadier growth may stabilize the market and prevent it from entering into dangerous and fragile conditions.

Contact the Federal Savings Bank, a veteran owned bank, to find a low rate mortgage.

https://www.thefederalsavingsbank.com/Advice/Home-prices-in-2014

More homeowners regain equity

December 17, 2013

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Years after the start of the financial disaster and housing market collapse, millions of homeowners are finally gaining traction again. Even as interest rates have seen a slight bump over the last few months, most Americans are still able to find a low cost mortgage refinance rate and regain equity in their homes.

According to a recent report by CoreLogic, more homeowners are out of negative equity and into positive territory. CoreLogic found that 791,000 homes regained equity in the third quarter of 2013. Mortgage properties with positive equity grew to 42.6 million.

"Rising home prices continued to help homeowners regain their lost equity in the third quarter of 2013," said Mark Fleming, chief economist for CoreLogic. "Fewer than 7 million homeowners are underwater, with a total mortgage debt of $1.6 trillion. Negative equity will decline even further in the coming quarters as the housing market continues to improve."

Negative equity
While more homeowners were able to regain equity, 13 percent still remained underwater, representing 6.4 million homes.This is a great improvement from the previous quarter, when there were 7.2 million homes with negative equity or 14.7 percent of all properties with a mortgage. The total value of all underwater homes was $397 billion, compared to $430 billion at the end of the second quarter of 2013.

Properties with negative equity are also sometimes referred to as underwater homes. These homes fall underwater when home values drop or the mortgage debt increases - or both. Homes are defined as having negative equity when more is owed on the mortgage than the home is worth.

While more properties have regained equity from rising home values and mortgage refinance options, many homes were considered "under-equitied" - having less than 20 percent equity. Of the 42.6 million homes with positive equity in the third quarter of 2013, those that were under-equitied accounted for 10 million properties. Those with 5 percent or less positive equity are considered "near-negative equity," and make up 1.5 million homes.

Consumer confidence
CoreLogic reported that the number of underwater homes will continue to decline in 2014, as home prices and consumer confidence rise.

"We should see a further rebound in consumer confidence and economic growth in 2014 as more homeowners escape the negative equity trap," said CoreLogic's President and CEO Anand Nallathambi. "Home price appreciation has helped more than 3 million property owners regain equity since the first quarter of 2013."

According to a recent Gallup poll, Americans are feeling more confident about the economy. Following the federal government shutdown, the consumer confidence index fell 24 points. Since then, confidence has slowly returned and is on track to reach its highest level in five years. While the range is still negative, consumer confidence is good news for the housing market, as more Americans will be likely to buy a home if they think the economy is doing better and will continue to improve.

Contact the Federal Savings Bank, a veteran owned bank, to find the best mortgage refinance rates.

https://www.thefederalsavingsbank.com/Advice/More-homeowners-regain-equity

Mortgage rates fall

December 16, 2013

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After several economic reports were released over the last few weeks, including the November jobs report, signs that the economy was continuing to grow stronger prompted mortgage rates to unexpectedly fall slightly.

Freddie Mac announced that interest rates for a 30-year fixed rate mortgagedropped to 4.42 percent, down from the previous week's average of 4.46 percent. Mortgage rates were nearing an average of 4.6 percent only two weeks earlier.

"Mortgage rates were little changed amid a light week of economic data releases," said Freddie Mac Chief Economist Frank Nothaft. "Of the few releases, total nonfarm payroll employment rose by 203,000 in November and the unemployment rate declined to 7 percent."

The average rate for a 15-year fixed mortgage also declined during the same week, reaching 3.43 percent. The rate averaged 3.47 percent the previous week. Nothaft also noted that mortgage activity appeared to be picking up for single-family properties, suggesting that higher mortgage rates are easily absorbed by American borrowers.

"Also, single family mortgage debt outstanding increased for the first time since 2008," Nothaft stated. "This is a positive sign as it reflects that the pick-up in new purchase-money originations has offset loan paydowns and led to a net increase in principal outstanding."

Contact the Federal Savings Bank, a veteran owned bank, to find out more about affordable mortgages options.

Lending changes to come

December 13, 2013

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As part of the Dodd-Frank Act, new mortgage changes will take effect next month, prompting many to question how they will impact the housing market. After a solid year of price appreciation and steady home sales, the new set of rules should be understood by all borrowers hoping to get a low cost mortgage in 2014.

Qualified mortgage
U.S. Department of Housing and Urban Development recently changed what it defines as a qualified mortgage - or a mortgage that can be backed by the department. The new definition and standard will begin to take effect Jan. 10 next year. Many borrowers are wondering how the change will affect mortgages in 2014.

The new standard will not allow mortgage terms to exceed 30 years and will, for the most part, eliminate risky factors associated with borrowing. Fees and upfront payments may also not exceed 3 percent, though certain loan types may be exempt from this limit. Lenders will also need to be stricter when approving mortgage applications by conducting an analysis of financial information and records.

The goal of the changes is to set the standard higher for what types of mortgages lenders should be giving to Americans and to move away from short-term, high interest loans. The housing market collapsed in 2008 in part because of many subprime mortgages, so higher standards could greatly improve the overall health of the economy and prevent another financial disaster.

The Wall Street Journal reported that about half of all mortgages that defaulted during the recession could have been prevented by the new regulations that will soon come to pass. Additionally, 25 percent of loans made during that time would not be approved next year.

Ability to repay
In an effort to help borrowers avoid defaulting on their loans and maintain the health of the mortgage market, the new regulations also include a stipulation that debt payments cannot exceed 43 percent of household income. However, loans by Fannie Mae and Freddie Mac can have larger debt-to-income ratios.

"This sets the bar higher for consumers and changes the game in terms of how people lend and how they qualify that consumer," Cameron Findlay, chief economist at California-based Discover Home Loans, told U.S. News.

Contact the Federal Savings Bank, a veteran owned bank, to explore low cost mortgage options.