FHA Eliminates Unlimited CLTVs for Refinance Transactions
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This update from Mortgagee Letter 2010-24 contains changes to the new maximum CLTV limits for refinance transactions, which will be effective for case numbers assigned on or after September 7, 2010.
The combined amount of the FHA-insured first mortgage and any subordinate lien may not exceed the applicable FHA LTV AND the geographical maximum mortgage amount (does not apply to streamline refinance transactions).
Here are the 4 Maximum CLTVs for Refinance Transactions that you need to know about:
1. Rate and Term (or No Cash Out) Refinances = 97.75%
2. Refinances for Borrowers in Negative Equity Positions* = 115%
3. FHA-to-FHA Streamline Refinances With or Without Appraisals = 125%
4. Cash-out Refinances = 85%
* This refinance option is only available through December 31, 2012.