FHA Guidelines: New Risk Based Mortgage Insurance Guidelines

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The new FHA risk based mortgage insurance guidelines are set to take effect on July 14, 2008. They were originally set to take effect on January 1, but FHA held off due to public comments. The new guidelines appear to answer most of the concerns that I had about the original proposal.

The most notable part of this policy is that, although there is still substantial leniency, this is the first official adoption of minimum credit scores for the FHA program.

HUD has removed the original MIP rate bump for down payment source which I felt unnecessarily penalized those who needed help most. Borrower’s with non-traditional credit are still eligible for maximum financing as long as they qualify under the guidelines in Mortgagee Letter 2008-11.

Below is the chart showing the new MIP schedule in “basis points”. So in other words, 125 basis points means 1.25% of the loan amount. You can find the entire notice detailing all the reasoning here. (link corrected 5/28)

6/16/2008:  Here is the link to the official Mortgagee Letter with the final guidelines.