Heads up, more tightening of the market per Mortgage Insurance companies

"The maximum allowable debt to income (DTI) ratio on all conventional loan products is being reduced to the lesser of 45% or the maximum permitted per the product. This maximum DTI ratio will be in effect regardless of what the AUS findings, including DU, LP or CDU, may allow.  CDU will be updated on 12/1/08 with the new DTI requirement and will issue a finding of “Needs Further Review” for all loans with a DTI > 45%.  All manually underwritten loans and loans approved by an AUS prior to 12/1/08 will require a review of the final DTI to ensure that it does not exceed 45%.

The maximum DTI of 45% will apply to all loan to values, however loans requiring mortgage insurance (MI) must be underwritten to the more restrictive guidelines of the MI Company’s policy.  It is critical to obtain MI coverage as early in the process as possible. Waiving MI, or the inability to obtain MI is an unacceptable exception."

In English:
If your borrower doesnt have a 20% downpayment and needs PMI and their debt to income ratio is over 45%, then, there may be trouble.