In the mean time the lender that I was using for her financing sent out a notice that their guidelines were in the midst of change. There new guidelines would only allow for a 640 credit score and a max 48% debt ratio for any loans that were not registered by said date.

    After checking with the lender AE and getting the registration deadline and getting the go ahead to use the old guidelines on this particular loan and as long as the loan was registered before the deadline, we where ok to move forward with the loan per the lender.  So  I have gotten a DU approval, my customer signs my disclosures, signs the lenders disclosures per the new MDIA regulations, i get an ok from the lender to order the appraisal and i get the ok to use the old guidelines as long as the loan is registered by the deadline. Well, the file went into underwriting where it was decided that they would not allow a portion of her income to be used.  Thus it sent her debt ratio up to 56%. So now I am trying to find a lender who will allow a 620 credit score and a higher debt ratio with a DU approval. 

  Well, i get on the phone and start calling my other lenders and with out notice being sent out by these other lenders, they too have changed their guidelines to a max 45%-50% debt ratios, with a very few allowing up to 55% debt ratios  Give me a break! I  have a full doc loan with DU approval.  My customer is a single mom with 2 kids and working two jobs to be able to afford a house for her and her kids. She is trying to use the government Tax Credit to help offset some of the cost so, now what do I do?

    Ok, so I start going through the different ways and scenarios to see what i can do. I have to find a way to lower her debt ratio. If I suggested that she not use the Tax Credit for closing cost, that would alleviate about $200 in debt.  That would put her at 54% debt ratio without being able to use these funds for closing.  Still not enough but that would help!  I could lower her interest rate below par with discount points.  That would be a double edge sword.  It would increase her closing costs but lower her monthly payment.  Not so good!  I could extend the terms of the loan and decrease her monthly payment that way, truly not an overall benefit to the customer.  So keeping to my motto, the customer comes first...I keep digging for a solution. 

    After several hours of calling and e-mailing.  I was talking with one of my very knowledgable AE's and he told me about a few programs that are not widely used or even available with many of our other lenders; even some of the big banks do not use them he said.  

    Here is how the programs work in conjunction with FHA financing.  One of the programs would allow me to lower her monthly payment (only for qualifying purposes) to help reduce the debt ratio.  The second program will allow me to change the terms for the Tax Credit and use a lower monthly payment in calculating her debt ratio.  BAM!  Being able to lower her debt ratio, while still using the Tax Credit for closing costs and she now is at a 53% debt ratio.  This AE also stated that with DU approval they do not worry about the debt ratio.  Imagine that!  A lender who is willing to do loans in the manner of which the programs were set up for.  

  I am happy to have found out about these alternate programs that are not readily known about. Being able to save my Realtors deal and be a part of helping a customer purchase a home where her kids will now have their own room and a back yard to play in.  This is truly what being a loan officer is about.  Helping families!