How are HUD Guidelines Changing?

Today, HUD has announced their intention to make the following guideline changes for loan terms greater than 15 years:

  • Lower the up-front Mortgage Insurance Premium (MIP) from 2.25% to 1%,
  • Increase the annual (monthly) MIP From .50–.55% to .85–.90%, depending on Loan-to-Value (LTV).

When Do Policy Changes Take Effect?

This policy change is scheduled to be effective for case numbers issued on September 7, 2010, pending being signed by President Obama.

How Will These Changes Effect Borrowers?

A borrower will need an estimated $75-80 more in monthly income, or $900 more per year, to qualify per $100,000 in loan amount.

For Example:

Loan Amount: $100,000
Interest Rate: 5%
Loan Term: 30 years
LTV: 96.5%

Upfront Mortgage Insurance (UFMIP)
$101,000 = new MIP mortgage amount
$102,250 = old MIP mortgage amount

Annual Mortgage Insurance Premium (MIP)
$909.00 ($75.75 Monthly) = new Annual MIP based on $101,000
$562.38 ($46.86 Monthly) = old Annual MIP based on $102,250

Monthly Payment (Principal, Insurance, & Monthly Mortgage Insurance)
$617.94 = new monthly payment
$595.76 = old monthly payment

This is cutting edge news and a more formal announcement will be made soon. I wanted you to know about this guideline change ASAP so you could respond quickly to questions from your clients. If you or your borrowers have questions, please contact me, Max Leaman: (512) 293-1239 or email

You can read more information about the changes here: HUD Newsletter.