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FHA Risk Based Premiums Effective 7-14-2008

Posted on June 23, 2008 by Ray Williams.

Effective with new FHA case number assignments on or after July 14, 2008, FHA will implement risk-based premiums on one- to four-unit single family mortgages. The premium matrix is shown below, replacing the premium matrix in Mortgagee Letter 00-38, which identifies the current mortgage insurance premiums for FHA’s single family programs.

Highlights Regarding FHA’s Risk-Based Premiums

· UFMIP will range from 1.25 percent of the loan amount for lower-risk borrowers to 2.25 percent for riskier borrowers.

· No borrower who qualifies for a FHA-insured mortgage will pay more than 2.25 percent on the upfront mortgage insurance premium (UFMIP) and 55 basis points for the annual premium.

· Borrowers with credit bureau scores must be risk-classified by FHA’s TOTAL Mortgage Scorecard.

· Those in risk categories without a premium shown are not eligible for FHA-insured mortgage financing.

· Borrowers without credit bureau scores will need to be manually underwritten and deemed as eligible based on criteria described in Mortgagee Letter 2008-11; the mortgage insurance premium will be determined by the loan-to-value ratio for the non-traditional column in the premium schedule.

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