MGIC has increased acceptable debt-to-income ratios, decreased its required credit scores in some markets and eased up on its rules for construction transactions.
The mortgage insurer outlined the updates in MGIC Bulletin #07-2010.
According to the revisions, the maximum owner-occupied DTI has been raised to 45 percent as long as the credit score is 740 and the loan has a fixed rate or is an adjustable rate with at least a five-year fixed term.
MGIC said that loans on properties subject to completion can be considered purchase as long as the improvements are at least 90 percent complete. A 120-day commitment period will apply.
The mortgage insurer won’t require recertification of a property’s value or of the borrower’s income and employment if the insurance is activated within 120 days of when the commitment is issued. Insurance can be activated as of the closing of the construction loan or as of the date of the closing of the permanent loan.
Properties that have been sold in the past 90 days are now eligible for insurance, though a “full-file” underwrite is required on transactions where the property was acquired by the seller fewer than 180 days before the purchase contract date.
On loan amounts above $417,000 in tier-two markets, the minimum credit score is being cut to 720 from 760.
MGIC said the changes impact mortgage insurance applications received on or after Dec. 1.
In addition, the qualifying rate on adjustable-rate mortgages less than five years will increase to “FIAR” plus 2 percent, while the maximum DTI is 41 percent. This update is effective on Jan. 1, 2011.
