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Reminder: Fannie Mae and Freddie Mac 80% AMI Income Limits Changes

As a reminder, the Conventional 80% Area Median Income (AMI) qualifying income limits for all Minnesota counties have changed, but some loans may still need to use the 2019 limits (see below).  
How does the 80% AMI income limits impact conventional loans?
Borrowers with loan qualifying income at or below the 80% AMI limit are eligible for:
  • A lower interest rate
  • Less expensive (charter rate) mortgage insurance
  • The Upfront Paid Mortgage Insurance (UPMI) option
How do the new conventional income limits impact Fannie Mae loans?
  • Loans with initial DU run dates on or after June 20 must use the new 2020 limits.
  • Loans with initial DU run dates prior to June 20 must use the old 2019 limits.

    Because our loan commitment system doesn't capture the DU run date, you may need to reach out to the Partner Solutions Team if the system does not generate the correct rate.

How do the new conventional income limits impact Freddie Mac loans?
Freddie offers more flexibility, but this may require you to reach out to the Partner Solutions Team if the system does not generate the correct rate.
  • In counties where the income limits increased (all but Rice, Chippewa, and Houston Counties), you can use the more generous 2020 limits even if you had an LPA accept recommendation prior to July 12.
  • In counties where the income limits decreased (Rice, Chippewa, and Houston Counties), if you had an LPA accept recommendation prior to July 12 you get to still use the more generous 2019 limits.
  • For manually underwritten mortgages, use the 2020 limits for any loans with application received dates (i.e. initial 1003 date) on or after July 12, 2020.

Will the Minnesota Housing Commitment System automatically know which income limit and interest rate apply to my loan?
No.
How can I make sure my conventional borrowers get the correct rate they are eligible for?
  1. Follow steps on the Conventional Income Limits document to determine whether your borrower is above or below 80% AMI.
  2. Compare the rate the system is generating to the rate for the borrower’s income tier (above or below 80% AMI) on the Minnesota Housing rate sheet.
  3. If the system did not generate the correct rate, contact the Partner Solutions Team at mnhousing.solution@state.mn.us for help locking your loan at the correct rate. 
TIPS to Avoid Common Errors:
  1. Understand the difference between the Minnesota Housing Eligibility Income and Monthly Qualifying Income.

2. Update the Minnesota Housing Commitment System with the final underwriting income (loan qualifying income run through DU or LPA) prior to closing the loan because this income drives the interest rate and the MI coverage requirements.
3. If the loan qualifying income changed since you locked the loan, follow the steps on the Conventional Income Limits document to determine if the borrower’s income tier has changed prior to closing. The correct interest rate and MI coverage for your borrower will have decreased or increased if borrower’s income tier changed.
System Maintenance Saturday from 10 a.m. to 2 p.m.

The Minnesota Housing commitment system (this system) will be unavailable from 10:00 a.m. until 2:00 p.m. this Saturday, August 8th.  Please do not sign into the system during this timeframe.  
New Series of Monthly Minnesota Housing Update & Underwriter Calls
Join us monthly to review recent Minnesota Housing updates and important information to help you originate and process our loans. Click here to register for the monthly calls.
Please note that if you signed up for the last series of calls, you'll need to register again for the new series. When you register, you will be signed up for all sessions but can attend the sessions that work for you. All calls occur on the second Thursday of the month from 9:00-10:00 a.m. CST. Next sessions are:
  • Thursday, August 13
  • Thursday, September 10
  • Thursday, October 8
  • Thursday, November 12
  • Thursday, December 10
Questions?
You can reach the Partner Solutions Team at 651.296.8215 or 800.710.8871 between 8:00 a.m. and 5:00 p.m. on business days.
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