Most people need a mortgage in order to purchase a home—and in a few years the process of getting approved for that mortgage may become much more challenging for many Americans.
According to a recent article from Realtor.com, in January 2021, a temporary provision called the “qualified mortgage patch” (which exempts both Freddie Mac and Fannie Mae from certain requirements of the Consumer Financial Protection Bureau’s “Ability to Pay/Qualified Mortgage” rule, allowing them to purchase loans where the borrower has a debt-to-income ratio higher than the standard 43 percent) is set to expire. This will make it significantly more challenging for Americans with a higher debt-to-income ratio to secure a mortgage. And we’re not talking about just a few Americans; from 2014 to 2018, a whopping 3.3 million mortgages—roughly 19 percent of all mortgages sold to Freddie Mac and Fannie Mae—were made possible by the qualified mortgage patch.
If you’ve been thinking about buying a home, you should definitely consider securing a mortgage and making a purchase sooner rather than later—because if and when this mortgage loophole expires, it may prove more difficult.