FHA loans are now acting slightly based on previous foreclosures and first payment defaults. Yes, there is some risk in any loan. HUD/FHA has been around since 1934 and even though they truly pride themselves on helping first time homebuyers and those with challenged credit, they are now raising certain requirements. Nobody ever is in business to take a loss on anything.
I delayed in writing about this, as so many others have been publishing this new change and the chart, because it was never official. So many loan officers fail to realize that anything that is agreed upon with HUD, is not official until they send out their mortgagee letter. Hud released this mortgagee letter 08-16 on June 11th, 2008. So it's now official. Any and all FHA loans that are registered with a FHA case number on or after that July 14th, 2008 will be affected by this change.
This new change is either positive or negative, depending on what side of the fence that you sit on. It will reward those with higher credit scores and in some cases, if you have 5% or more down. This chart is for both those that are purchasing or refinancing. The new change is for calculating both the Up Front Mortgage Insurance Policy (UFMIP) and Monthly Mortgage Insurance (MMI).
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FHA Single Family Mortgage Insurance Upfront and Annual Mortgage Insurance Premiums (Loan Terms > 15 years) Effective as of July 14, 2008 |
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All premiums are specified in basis points (0.01%)
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Decision Credit Score (FICO)
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LTV |
850-680 |
679-640 |
639-600 |
599-560 |
559-500 |
499-300 |
Non - Traditional |
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≤ 90.00 |
125/50
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125/50 |
125/50 |
150/50 |
175/50 |
175/50 |
150/50 |
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90.01-95.00 |
125/50
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125/50 |
150/50 |
175/50 |
200/50 |
n/a |
175/50 |
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> 95 |
125/55
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150/55 |
175/55 |
200/55 |
225a/55 |
n/a |
200/55 |
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** This chart was copied from the HUD mortgagee letter : mortgagee letter 08-16 **
Overall, some will think that this is negative or discriminating. But FHA still makes this very affordable for most homebuyers or those refinancing. In order to make sure that you understand this chart and how FHA loans can work for you, you need to speak to a mortgage professional. Not everyone that says that they can do FHA mortgages, will be able to help you effectively. The chart is very self explanatory, but if you have any questions, please don't hesitate to e-mail me or call me. jbelonger@ihmci.com
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For more information on FHA loans, please go to this link. The FHA Expert
For more information on how you can obtain your dream home, please click here : Mortgage Financing Options
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!!
Copyright © 2008 by Jeff Belonger
Thanks Jeff. I did not catch this. I am definitely seeing most programs going to a risk base model. AJ
FHA should indeed hedge themselves by charging higher MI for riskier loans.
Jeff - I didn't know this either. Thanks for the heads up. It's crucial to keep abreast of these changes. This is privy info for the Housing Industry.
Jeff,
Thanks for incorporating the chart. Very helpful to me as I have read other posts on this topic and was confused. Thanks again!
Jeff, I'm writing to tell you that I appreciate your writing style. I feel as if you are talking to me in make-sense language while all the time explaining the technical aspects of mortgage products and underwriting guidelines. I would definitely recommend you to work with my clients. I believe we will see more FHA purchases! We need more loan officers such as yourself.