Within the next month FHA will change to a risk pay lending format like both Fannie Mae and Freddy Mac have done. The changes raise both the front end mortgage insurance premium and the monthly. For borrowers with good credit and higher LTV will have rates and premium decrease. For most the rates will increase.
Tha changes are as follows.
Let's take a closer look at the ten primary changes to the FHA guidelines:
1. Borrowers with either no score or at least 500 may get an LTV >90%
2. Borrowers with a score less than 500 get a maximum LTV of 90%.
3. Borrowers without scores will require manual underwriting.
4. Upfront Mortgage Insurance Premiums will range from 1.25% to 2.25%, depending on score.
5. The Monthly Mortgage Insurance will range from .50% to .55% depending on score.
6. The premium is based on the borrower with the lowest score.
7. If one of the borrowers has no score, then the Non-Traditional credit grade is used.
8. Credit rescoring is allowed to improve a borrower's credit grade.
9. All FHA Secure refinances >95% LTV with delinquencies have a 2.25% UFMIP and .55% MMI.
10. Along with purchases, these changes apply to cash-out, rate & term, and non-delinquent FHA Secure refinances.
The only constant is change.
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