Qualifying Interest Rate Used by Desktop Underwriter for ...
[Pages:1]Qualifying Interest Rate Used by Desktop Underwriter for Proposed Monthly Housing Expense
July 17, 2021
The proposed monthly housing expense consists of principal, interest, taxes, insurance, and other assessments (PITIA) based on the fully amortizing repayment schedule and is included in the total expense ratio. For more information on qualifying payment requirements, refer to the Selling Guide.
The following table provides information on the qualifying interest rate Desktop Underwriter? (DU?) uses to calculate the PITIA when qualifying the borrower:
DU ARM Plan
Qualifying Rate
FM GENERIC, 1 YR, 2% Annual Cap
Note rate plus 6%
FM GENERIC, 1 YR, 1% Annual Cap
Note rate plus 5%
FM GENERIC, 3 YR
FM GENERIC, 5 YR
Greater of fully indexed rate1 or note rate plus 2%
FM GENERIC, 7 YR
Greater of fully indexed rate1 or note rate
FM GENERIC, 10 YR
DU Plan
Qualifying Rate
Lender ARM plan*
Qualifying rate entered in the ARM Qualifying Rate field in DU
*ARM plan number not recognized by DU as a Fannie Mae ARM plan. If the ARM Qualifying Rate field is not entered, DU will use the
note rate plus 5%
1The fully indexed rate is defined as the index plus the margin as entered in the online loan application.
N O TE : The fully indexed rate is rounded to the nearest one-eighth percent per the B2-1.4-02, Adjustable-Rate Mortgages (ARMs) section in the Selling Guide.
? 2021 Fannie Mae 7.21.21 1 of 1
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