Starting Monday, December 13, 2010, Fannie Mae is changing its mortgage lending guidelines.

For some mortgage applicants of Washington , the loan approval process will simplify. For others, it will toughen. How you'll be affected personally will depend on your credit profile and your loan characteristics.

Among the biggest changes from Fannie Mae is a new set of guidelines for gift funds. When the new rules roll out, accepting cash gifts for downpayment will be easier.

Under the new guidelines, buyers of owner-occupied, 1-unit properties (i.e. single-family homes, condos, townhomes) can forgo Fannie Mae's typical, minimum 5% personal downpayment contribution. Curently, a borrower must contribute 5% of their own money first, and then can use "gift" funds for the remaining portion of their down payment/closing costs.  Downpayments on homes meeting the above criteria can be comprised of 100% gifted funds.

Buyers of second homes and multi-unit properties, however, are not exempt.

There's also two changes pending with respect to revolving debt.

1. Installment debt with less than 10 payments remaining may no longer be waived in debt-to-income ratio calculations.  Currently, let's say you only have 4 months left of car payments, we don't have to count the payment against you as it will be paid off in 10 months of less.  New rules state it doesn't matter; if it is on the credit report we count it.
2. Debt lacking a monthly payment on credit must be assigned a payment equal to 5% of the outstanding balance. 

Both of the above may increase the number of loan denials in 2011.

And, lastly, Fannie Mae changes some of its documentation requirements, the most noticeable of which will be with respect to income verification. Salaried workers and applicants whose commission/bonus accounts for less than a quarter of their income will have fewer paystubs to produce for underwriting.

Loan applications taken prior to December 13, 2010 are exempt from the new rules.

Fannie Mae's complete guideline changes are available online at http://efanniemae.com.