Refinance Transactions: New Maximum Mortgage Calculation
The Housing and Economic Recovery Act of 2008 revised the National Housing Act to:
Eliminate the variable loan-to-value (LTV) limits that were based on the combination of the property value and the average closing costs of the State where the property is located and
Limit the total FHA-insured first mortgage to 100 percent of the appraised value, and permit the inclusion of the upfront mortgage insurance premium (UFMIP) within that limit.
For simplicity purposes, and to eliminate any confusion in the marketplace, effective for case numbers assigned on or after January 1, 2009 the maximum LTV for most refinance transactions will be 97.75 percent. A summary of maximum LTVs is shown in the chart, along with the complete Mortgage Letter at http://portal.hud.gov/pls/portal/docs/PAGE/FHA_HOME/LENDERS/MORTGAGEE_LETTERS/2008_MORTGAGEE_LETTERS/08-40%20REFINANCE%20TRANSACTIONS%2C%20NEW%20MAXIMUM%20MORTGAGE%20CALCULATION.DOC .
A matrix comparing rates and terms, streamlined with and without appraisals, is provided at http://portal.hud.gov/pls/portal/docs/PAGE/FHA_HOME/LENDERS/MORTGAGEE_LETTERS/2008_MORTGAGEE_LETTERS/ATTACHMENT%20FOR%20ML%2008-40%20REFINANCE%20TRANSACTIONS%2C%20NEW%20MAXIMUM%20MORTGAGE%20CALCULATION.DOC .
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