Underwriting Guide and summaries

Various trademarks, registered trademarks, service marks, and related branding marks (possibly unmarked) are used within this Guide; all of these, without exception, are the legal property of their respective owners.

• MGIC: Trademarks: MGIC Go!™
• Fannie Mae: Trademarks: Community Seconds™, HFA Preferred™, RefiNow™; Registered trademarks: Collateral Underwriter^®, CU^®, Desktop Underwriter, DU®, HomeReady^®, HomeStyle, MH Advantage^®
• Freddie Mac: Registered service marks: Affordable Seconds^®, CHOICEHome^®, CHOICERenovation®, Home Possible^®, HFA Advantage^®, Loan Product Advisor^®, LPA^®, Refi Possible℠

For your ease of use, this Guide includes:

• Internal cross-references linked to other sections of the Guide. For example, (2.01) means you'll find related information in Section 2, subsection 1
• External links to our website, mgic.com

MGIC Go! Loans: Loans that receive a valid DU Approve or Loan Product Advisor Accept response are eligible for MGIC mortgage insurance through our MGIC Go! streamlined underwriting program (Section 2).

Standard Loans: Our Standard Underwriting Guidelines apply to loans that are not processed through an Agency AUS (otherwise known as manually underwritten loans) or loans that do not qualify for MGIC Go! For standard loans (Section 3), where indicated in this Guide, you may follow standard Agency guidelines and Agency selling guide documentation requirements, along with any specified MGIC guidelines and requirements.

When aligning with Agency guidelines, you must:

• Choose one Agency to follow when underwriting the loan. Co-mingling of Agency selling guide requirements is not permitted
• Use the initial loan application date as the Agency selling guide effective date
• Retain in the mortgage loan file any documentation or information you relied upon and make it available to us upon request

Where FHFA high-cost max is referenced, the maximum loan amount must not exceed the FHFA published conforming loan limit for the specific county of the subject property. FHFA baseline conforming limit is restricted to FHFA's published base limit, regardless of FHFA county loan limit for the subject property.

See our Master Policy for full definitions.

The application means a request for mortgage insurance for a loan, or a request for modification of such insurance, in a format we approve, including all supporting materials and other information we may require. When submitting an application to us, you:

Are responsible for:

• Collecting, evaluating and verifying the accuracy of the information you provide to us in the format approved by us, regardless of the source of the information or how you obtained it
• Complying with the requirements when using an automated tool as outlined in these Underwriting Guidelines
• Ensuring that all information you provide is consistent with automated tool output
• Submitting updated, true, complete and verified information if you discover prior to activation that any information previously provided to us has become untrue, inaccurate or incomplete
• Underwriting and satisfying all applicable conditions for the loan in compliance with applicable law and these Underwriting Guidelines in effect at the time the application is submitted

Represent that:

• The application is true and complete in all material respects
• No information contained in or submitted in support of the application was false or misleading when provided
• The application does not omit any information that would make any other information provided untrue, inaccurate or incomplete, or that would have made the loan ineligible for insurance or for coverage at the premium rate offered

Note: See state fraud warnings at mgic.com/warnings.

The following documents (in hard copy or electronic form), as applicable, must be retained in the mortgage loan file and made available to us upon request:

• Final, valid agency AUS Findings/Feedback Report (if applicable)
• 1008/1077 Uniform Underwriting and Transmittal Summary
• Completed, signed 1003/65 loan application
• Credit report and all other credit documentation, including Verification of Rent (VOR) or Verification of Mortgage (VOM)
• Income and employment verification for all borrowers
• Asset verification for all borrowers
• Appraisal, including all addenda, attachments, schedules, photographs and other information included by the appraiser
• Property Data Collection (PDC) or Property Data Report (PDR), if applicable
• Collateral Underwriter (CU) Findings or Summary Submission Report (SSR), if applicable
• Sales contract or equivalent, if applicable
• Loan approval, underwriting and/or processing notes, if available
• Any other document used in the underwriting process not listed above

The following documents (in hard copy or electronic form), as applicable, must be retained in the mortgage loan file and made available to us upon request:

• Final Closing Disclosure or other settlement statement, if applicable
• Signed promissory note
• Signed mortgage or deed of trust with all riders
• Title insurance commitment or final title policy
• Final signed loan application (1003/65)
• Any other closing-related documentation that we may request

When we approve an insurance application, we issue a Commitment/Certificate via the Loan Center, electronic delivery or fax, according to your preference (see 1.10). A Commitment/Certificate serves as our commitment to insure a loan. Once you've activated insurance, it serves as the insurance Certificate. If multiple Commitment/Certificates have been issued, only the most recent is considered valid. View a sample Commitment/Certificate at mgic.com/samplecc.

If we are unable to approve an insurance application, we’ll provide you with a Statement of Denial, including the specific reasons insurance coverage was declined.

If you deny the loan, we rely on you to forward the Statement of Denial to the mortgage loan applicant, as required by ECOA.

Where FCRA requires us to notify the loan applicant that insurance has been declined, we’ll send a letter that satisfies both ECOA and FCRA requirements directly to the loan applicant and a copy to you.

If we are unable to make a decision based on the loan information you submitted, we'll contact you for clarification.

Our Delegated Underwriting Program allows you to submit an application with loan data only (in lieu of physical documents) via the Loan Center, your loan origination system or other electronic data interface. The data transmission must identify the application as a Delegated Underwriting Program loan. You may submit an application any time, but no later than 45 days after the closing date.

When you apply for MGIC MI through our Delegated Underwriting Program, you represent:

• Data is true and accurate and consistent with the loan origination file documentation
• The loan meets our Underwriting Guidelines in effect in all material respects at the time of submission

By applying for MI under our Delegated Underwriting Program, you acknowledge that we are relying on your representations; that such representations are material inducements to our insurance of each delegated underwriting loan; and that we are not obligated to underwrite, investigate or verify any information in connection with our issuance of a Commitment or Certificate for a delegated underwriting loan, or review any information or materials submitted to us.

All Master Policy holders are eligible for our Delegated Underwriting Program subject to the eligibility requirements below. We’ll notify you if you don’t qualify, in which case you may apply for MI via a non-delegated MI underwrite (1.09).

To participate in our Delegated Underwriting Program, you must have and maintain:

• An independent and qualified underwriting staff
• The ability to fund your own loans
• Business operations in a non-residential space that is a legal and permissible use
• Comply with all other policies, procedures and processes outlined in this Guide

We may also consider your appraiser approval and monitoring processes, pre- and post-closing quality control processes and procedures (including fraud prevention controls), performance history and results from MGIC quality control audits, and principals and senior management.

We reserve the right to terminate, suspend or limit your participation in our Delegated Underwriting Program with a 10-day written notification. If we determine you are no longer eligible to participate, we won't cancel your Master Policy nor will it affect Commitments/Certificates issued before the termination date.

However, if we terminate, limit or suspend your participation in the Delegated Underwriting Program for cause, it will be effective immediately upon our notice to you identifying such cause. If we notify you orally, we will then provide written confirmation of termination, suspension, or limitation within 10 days of our initial notice. When we terminate, limit or suspend your participation in the Delegated Underwriting Program for cause:

• We will have no obligation to insure any loan:
• Submitted under the Delegated Underwriting Program after the notice of termination, suspension or limitation
• You have previously approved and submitted to MGIC under the Delegated Underwriting Program for which we have not issued a Commitment
• Unless we provide otherwise in our notice of termination, suspension or limitation, Commitments issued prior to the notice effective date for which coverage has not been activated will be null and void

We may change the Delegated Underwriting Program or lender eligibility and participation requirements at any time. We'll notify you of any changes and publish them with an effective date on mgic.com.

Effective periods begin on the date the Commitment/Certificate or PreQual Approval is issued through a specific date based on loan purpose.

If you discover prior to activation of coverage that any information you previously provided has changed or needs to be updated, you are required to submit updated, verified and complete information.

Report loan changes/updated information to us via the Loan Center, your EDI or LOS, or by contacting an MGIC Underwriting Office, mgic.com/uwoffice. We may request additional information.

After an underwriting review (where necessary), we’ll process any changes, and, if we approve them, send you a revised Commitment/Certificate. If the loan is no longer insurable, we’ll let you know the reasons why.

We do not require approval prior to closing for typographical corrections to the borrower's name.

Report all changes or errors you discovered after activating coverage to an MGIC Underwriting Office, mgic.com/uwoffice, or MGIC Customer Service, 1-800-424-6442 or customer_service@ mgic.com. We’ll review the information, determine if the loan remains insurable and communicate the status of coverage. We may request additional information.

Contact MGIC Customer Service to correct typographical errors or update an address once a house number is assigned to a property previously identified only as a lot number.

If you need to extend a Commitment/Certificate effective period, contact your MGIC Underwriting Office, mgic.com/uwoffice. We may request additional information to determine if the Commitment/Certificate is eligible for extension. For a Commitment/Certificate that expired prior to loan closing and activation of coverage, we may require you to submit a new application.

A loan is seasoned when one or more mortgage loan payments have been made prior to the application date.

Follow MGIC Underwriting Summaries and these guidelines:

• We'll consider seasoned loans on a case-by-case basis provided the loan:
  • Is current, AND
  • Has had no late payments 30 days or greater
• Submit for non-delegated underwriting (1.09) and include the following:
  • Origination file (1.07.02)
  • Closing file (1.07.03)
  • Ever to date loan payment history
  • Current credit report, if loan file credit report is older than 4 months
  • Current appraisal, if loan file appraisal is older than 12 months
  • Verbal Verification of Employment
• MGIC Underwriting Guidelines and premium rates in effect at the time of submission apply. You are responsible for all premium due based on the premium type

Apply the following MGIC Go! overlays; otherwise, refer to the respective Agency selling guide for requirements not provided in the Findings/Feedback. For properties in Guam, see 2.02.04; for properties in Puerto Rico, 2.02.03.

Exclusively for loans:

• Originated and closed as part of an HFA first mortgage program
• Enter MGIC Program Code #2881 (state HFAs) and #3881 (local HFAs)
• With an Agency AU decision of:
• DU Approve/Eligible or
• Loan Product Advisor Accept/Eligible

Apply the following MGIC Go! overlays; otherwise, refer to the respective Agency selling guide for requirements not provided in the Findings/Feedback. For properties in Guam, see 2.02.04; for properties in Puerto Rico, 2.02.03.

Apply the following MGIC Go! overlays; otherwise, refer to the respective Agency selling guide for requirements not provided in the Findings/Feedback.

Follow these MGIC guidelines:

• To be eligible for MGIC mortgage insurance, each borrower must:
• Be a natural person or be represented by an inter vivos revocable trust
• Have the legal capacity to reside in the United States and contract for a mortgage
• Have a valid US-issued Social Security Number
• Borrowers are ineligible if they:
• Have been issued an Individual Tax Identification Number (ITIN) in lieu of a Social Security Number
• Are foreign nationals with diplomatic immunity
• Are Corporations, LLCs or Partnerships
• Are irrevocable trusts
• Are non-US citizens lacking legal status to live and work in the United States

Follow these MGIC guidelines:

• We do not allow the credit history of guarantors or co-signors to offset derogatory credit of the applicant
• The co-signer or guarantor's credit will be considered for eligibility and premium pricing

Follow these MGIC guidelines:

• The occupant borrower must meet all MGIC Underwriting Guidelines without including the non-occupant co-borrower’s income and assets for qualifying purposes; after occupying borrower’s assets meet the own funds requirement in (3.10.01) non-occupant co-borrower’s assets may be considered
• The non-occupant co-borrower's credit will be considered for eligibility and premium pricing
• The non-occupant co-borrower may not be an interested party (e.g., seller, builder, real estate agent)

Follow these MGIC guidelines:

• A minimum of 1 primary beneficiary of the trust must occupy the property.
• For qualifying, use the income and assets of at least 1 primary beneficiary who will occupy the property and become personally liable on the note as co-signer or guarantor and acknowledge the mortgage.
• Retain a copy of the trust documents.

Follow these MGIC guidelines:

• The borrower must demonstrate legal residency. MGIC does not specify what documentation is required to confirm an individual's lawful status in the US
• The borrower must meet MGIC's employment (3.09) and credit (3.11) guidelines
• If the borrower is a non-permanent resident alien
  • They must have a minimum 2-year history of US residency
  • If income is used to qualify, they must have the legal right to work in the US
• Deferred Action for Childhood Arrivals (DACA) borrowers are eligible

When we receive an application, we consider any other loans held by the same borrower that are currently or were previously insured by MGIC. We reserve the right to decline an application for excessive borrower exposure or history of claim or rescission.

Follow our Underwriting Summaries (3.02) as well as these MGIC guidelines:

• We allow borrower-paid mortgage insurance premiums to be financed with the loan up to:
• Our maximum published loan limits
• A maximum 103% LTV, including the financed premium 

For Community Seconds and Affordable Seconds, follow Agency guidelines and Agency selling guide documentation requirements and MGIC Underwriting Summaries (3.02).

For all other subordinate financing, follow our Underwriting Summaries (3.02) as well as these MGIC guidelines:

• The CLTV and HCLTV must not exceed our maximum published limits
• The subordinate lien must:
• Be recorded
• Be at current market rates for second mortgages
• Not be provided by any interested party to the transaction (e.g., seller, builder/developer, real estate agent, broker, etc.)
• Subordinate lien payments must:
• Cover at least the interest due (negative amortization is ineligible)
• Be included in the DTI ratio 

Under New York State regulatory requirements, a purchase transaction is eligible for mortgage insurance based on the "fair market value" of the property as follows:

• If the property is a cooperative, the loan amount must be greater than 80% of the sales price and greater than 75% of the appraised value to be eligible for mortgage insurance.
• For all other properties, the loan amount must be greater than 80% of the appraised value to be eligible for mortgage insurance.

Follow Agency guidelines and Agency selling guide documentation requirements and MGIC Underwriting Summaries (3.02).

Follow Agency guidelines and Agency selling guide documentation requirements, MGIC Underwriting Summaries (3.02) and these guidelines:

• We will allow the payoff of a nonpurchase-money subordinate lien provided:
  • It has been seasoned for at least 12 months prior to the loan application date AND
  • If HELOC, total draws within the last 12 months were less than $2,000
• We will allow the payoff of an unseasoned subordinate lien provided the entire proceeds of the subordinate lien were used and documented for home improvements in accordance with our Home Improvement/Renovation guidelines (3.06.04)
  • Submit the subject loan for non-delegated underwriting (1.09)
• We will allow the buyout of an owner's interest provided:
  • It is the result of a divorce, separation or dissolution of domestic partnership
  • The subject property was jointly owned for at least 12 months preceding the new loan AND
  • All parties have signed a written agreement stating the terms of the property transfer and the proposed disposition of the refinance proceeds
• Cash back to the borrower is limited to the greater of 1% or $2,000 of the loan amount

A home improvement/renovation mortgage loan allows a borrower to purchase a property or refinance their existing loan and include in the loan amount funds to cover the costs of repairs, remodeling or renovations that are permanently affixed to the property.

Follow our Underwriting Summaries (3.02) and these MGIC guidelines:

• When the borrower does not have legal ownership of the property as of loan closing date
  • Follow Purchase Transaction (3.06.01) guidelines
  • To determine property value for LTV calculations, use the lesser of:
    • Purchase price plus documented cost of improvements; OR
    • Current appraised value as completed per plans and specs
• When the borrower has legal ownership of the property as of loan closing date
  • Follow Rate-Term Refinance Transaction (3.06.02) guidelines, including ability to pay off unseasoned home improvement subordinate lien
  • To determine property value for LTV calculations, use current appraised value as completed per plans and specs
• Typical expenses and fees that may be included are:
  • Architectural, consulting and engineering fees
  • Labor
  • Materials
  • Permits
  • Title and property inspections
  • Contingency reserve not to exceed 15% of the improvement/renovation costs. All unused contingency reserves must be applied as a principal reduction
• Renovations must be completed in a workmanlike manner by professionals meeting industry standards
  • Document with the contract and any borrower-provided bids itemizing the cost of labor and materials
• We'll consider borrower-completed improvements provided:
  • The borrower has the skill to perform the work (for example, a borrower who is a licensed electrician may complete electrical work)
  • Borrower may be reimbursed for the cost of the materials
  • They do not exceed 10% of the “as completed” value of the property
  • They are clearly identified in the construction contract

Follow Agency guidelines and Agency selling guide documentation requirements.

Loan purposes ineligible for MGIC mortgage insurance include:  

• Cash-out refinance transactions
• Home Equity Line of Credit (HELOC) transactions

Follow Agency guidelines and Agency selling guide documentation requirements, MGIC Underwriting Summaries (3.02) and these guidelines:

• Parents or legal guardians may purchase or refinance (rate-term only) a property to provide housing for an adult child with a physical or developmental disability who is unable to work or does not have sufficient income to qualify for a mortgage on their own
• Children may purchase or refinance (rate-term only) a property to provide housing for a parent or parents who are unable to work or do not have sufficient income to qualify for a mortgage on their own
• Ineligible: Properties intended for use as a group home.

Follow Agency guidelines and Agency selling guide documentation requirements, MGIC Underwriting Summaries (3.02) and these guidelines:

• Borrower must not own any other residential properties other than their primary residence
• Rental income from subject property may not be used to qualify
• Ineligible: Properties intended for use as a group home.

Investment properties are ineligible.

Follow MGIC Underwriting Summaries (3.02) and these guidelines:

• Must be fully amortizing
• Maximum term: 40 years
  • If manufactured home, 30 years
• Must have level monthly principal and interest payments
• Must be qualified at the note rate.

Follow MGIC Underwriting Summaries (3.02) and these guidelines:

• Must be fully amortizing
• Maximum term: 40 years
  • If manufactured home, 30 years
• Minimum adjustment period: 6 months
• Maximum initial interest rate discount from Fully Indexed Accrual Rate (FIAR): 300 basis points
• Maximum margin: 300 basis points
• Must be based on a publicly available index that is not controlled by the lender or servicer

Follow MGIC Underwriting Summaries (3.02) and these guidelines:

• Minimum initial term: 5 years
• Maximum amortization term: 40 years
  • If manufactured home, 30 years
• Maximum LTV/CLTV: 95%
• Must be qualified at the note rate
• When the balloon payment is due, the loan must be renewed or replaced with a new first-lien mortgage loan:
  • At rates and terms generally prevailing in the marketplace
  • With no re-underwriting of the loan

Borrower must qualify using the monthly amortization payment (3.12.02).

Follow MGIC Underwriting Summaries (3.02) and these guidelines:

• Buydown funds may be paid by the:
  • Borrower
  • Employer as part of an employee relocation benefit
  • Lender
  • Seller as part of the maximum allowable interested party contribution
• Maximum temporary buydown:

  Eligible Loan Types	Max. Annual Rate Increase	Property Unit Count	Max. LTV/CLTV	Buydown Schedule
  Fixed-rate, ARMs with ≥ 5 year initial fixed period, Balloons	1%	1	95%	2% – 1%
  		1	90%	3% – 2% – 1%
  		2	95%	2% – 1%

• Qualification:
  • ARM with an initial fixed period of 5 years – Use greater of note rate + 2% or FIAR
  • Fixed-rate or ARM with an initial fixed period > 5 years – Use note rate
• Ineligible: Cash-out refinance transactions

Loan types ineligible for MGIC mortgage insurance include: 

• Graduated-payment mortgages (GPM)
• Interest-only (IO) loans
• Loans that feature negative amortization (potential and scheduled)
• Pay-option ARMS (POA)

Follow these MGIC guidelines:

• Minimum 2-year employment history
• We'll consider shorter histories if the loan application demonstrates factors that reasonably offset the shorter history (for example, a borrower who has recently completed an undergraduate or graduate degree, a medical residency, or an apprenticeship and is beginning employment in their field)
• Income histories less than 24 months require non-delegated underwriting (1.09)
• Qualifying income should be likely to continue for 3 years after the note date

Follow Agency guidelines and Agency selling guide documentation requirements for these eligible income types along with additional MGIC guidelines where noted below.

Minimum borrower's own funds requirements are expressed as a percentage of Original Value, which may vary by property type and loan amount (see our Underwriting Summaries, 3.02). Our eligible asset type table (3.10.04) identifies acceptable sources for borrower's own funds that are used towards down payment, closing costs, pre-paid expenses and reserves.

Our minimum reserve requirements vary by loan amount and other characteristics (see our Underwriting Summaries, 3.02). Any asset eligible as a source for borrower's own funds or to complete the loan transaction is an acceptable source of reserves (see eligible asset type table, 3.10.04).

Follow Agency guidelines and Agency selling guide documentation requirements.

All assets in the following table are acceptable sources of funds for reserves (3.10.02) or to complete the mortgage loan transaction once borrower's own funds requirements have been met. Where indicated, they are eligible to meet borrower's own funds requirements (3.10.01).

Follow Agency guidelines and Agency selling guide documentation requirements along with additional MGIC guidelines where noted below.

The following types of assets are ineligible for down payment, closing costs, prepaid expenses and reserves, or to complete the transaction:

• Subject property refinance proceeds
• Credit card advances or financing
• Funds held in foreign countries or foreign accounts
• Health Savings Accounts (HSA)
• Salary advance
• Certain types of stock: Non-vested options, Non-vested restricted stock units, Companies not listed on a public exchange or marketplace
• Assets in a minor/custodial account
• Unsecured loans, other than those as part of an Employer Assistance Program
• Prorated real estate taxes
• Cryptocurrency

Follow these MGIC guidelines:

• Obtain a US credit report for each borrower on the loan application from data provided by at least 2 of the 3 national credit repositories: Equifax, Experian, or TransUnion
• Credit report inquiries within the most recent 90 days must be addressed by the borrower; if new credit was granted, verify terms and conditions

Follow Agency guidelines for Agency-acceptable credit score requirements, MGIC Underwriting Summaries (3.02) and these MGIC guidelines:

• A minimum of 2 credit scores is required for each borrower on the loan
• A credit score is considered usable and valid when a minimum of 3 traditional tradelines are reported, each with a minimum 12-month payment history
  • An authorized user account may be considered a valid tradeline if the borrower has been making the payments, and the payments have been paid as agreed for the past 12 months
• The Borrower Indicator Score, used to determine the Representative Credit Score, is determined using a minimum of 2 valid credit scores:
  • When 2 valid credit scores are provided, the lower score is the Borrower Indicator Score
  • When 3 valid credit scores are provided, the middle score is the Borrower Indicator Score
• The Representative Credit Score, used for underwriting and determining the premium rate, is the lowest Borrower Indicator Score among all borrowers on the loan (regardless of whether all borrowers have valid credit scores)
• Follow MGIC Underwriting Guidelines for traditional and/or nontraditional credit based on whether borrowers have valid credit scores:
  • When all borrowers on a loan have a valid credit score, follow Underwriting Guidelines for traditional credit (3.11.03)
  • When no borrower on a loan has a valid credit score, follow Underwriting Guidelines for nontraditional credit (3.11.04)
  • When 1 or more borrowers have a valid credit score, but 1 or more co-borrowers do not: For borrowers with a valid credit score, follow Underwriting Guidelines for traditional credit (3.11.03). For borrowers without a valid credit score, follow Underwriting Guidelines for nontraditional credit (3.11.04). A borrower with no valid score is not considered in determining the Representative Credit Score

Follow these MGIC guidelines:

• Review credit reports to determine if all borrowers:
  • Have a valid credit score (3.11.02) meeting our requirements
  • Meet our requirements for adverse credit (3.11.05)
• Reconcile all alerts in the credit report

We'll consider any borrower who does not have a valid credit score or meet our traditional credit requirements if they have established a nontraditional credit profile.

Follow our Underwriting Summaries (3.02) and these MGIC guidelines:

• Borrowers must establish a nontraditional credit profile including 3 or more open and active, documented credit references as detailed in our guidelines below, 3.11.04.01
• When all borrowers on a loan have nontraditional credit:
  • Nontraditional credit profile(s) must include a housing payment reference
  • Maximum LTV: 90%
  • Maximum loan amount: $1,249,125
  • Requires non-delegated underwriting (1.09)
• Nontraditional credit may not be used as a means for offsetting or enhancing derogatory credit found in a traditional credit history
• Borrowers who exceed any of the following adverse credit are ineligible:
  • No late payments on housing or non-housing credit references in the most recent 24 months
  • Non-medical collections, judgments or charge-offs in most recent 24 months
  • No bankruptcy, foreclosure, deed in lieu, or short sale ever to date

We'll consider borrowers who have had prior adverse credit events or delinquent payment histories if they have taken corrective steps to prevent recurrence. Recurring instances of adverse credit may indicate a disregard for financial obligations and may adversely affect the loan decision.

Follow these MGIC guidelines:

• Late payments
  • Housing: Most recent 24 months prior to loan application date: 1X30, 0X60, 0X90
  • No action is needed on non-housing installment and revolving payment histories as they are considered in the credit score
• Judgments, liens: Must be paid in full at or prior to closing
• Non-medical collections and non-mortgage charge-offs may remain unpaid at closing up to $250 per account and $1,000 aggregate
• Past due accounts: Must be brought current or paid in full at or prior to closing
• Bankruptcy, consumer credit counseling service, foreclosure, deed in lieu of foreclosure, short sale:

*Consumer credit counseling services are ineligible as tradelines to re-establish credit

When a credit report indicates 1 or more disputed or erroneous tradelines, follow these MGIC guidelines:

• To omit a disputed obligation from consideration, you must obtain a written explanation from the borrower and direct written documentation from the creditor showing the disputed credit report data is erroneous or inaccurate
• If there is no evidence to support omission of an obligation, it must be included in the total monthly debt

Follow these MGIC guidelines:

• One repository with a credit freeze is acceptable when the borrower has at least 2 repositories that are not frozen and 2 scores. Otherwise, you must access the borrower's credit report to determine their credit profile (3.11.01)

Borrowers who have no financial obligations documented through either traditional or nontraditional credit are ineligible.

The DTI ratio is a key factor in determining the borrower's ability to repay the mortgage obligation.

For calculation purposes:

• When qualifying your borrower for MGIC mortgage insurance, we do not require you to include the mortgage insurance premium in the DTI calculation
• Total Monthly Obligations = Monthly housing expense plus the monthly debt obligation (3.12.03)
• Total Monthly Gross Income = The sum of all income from eligible sources
• DTI Ratio % = Total Monthly Obligations + Total Monthly Gross Income

Follow these MGIC guidelines:

• Our maximum DTI ratios vary by occupancy, loan type, loan amount and other characteristics (see our Underwriting Summaries, 3.02)
• For transactions with a non-occupant co-borrower, the occupying borrower's DTI must meet our maximum DTI ratio requirements without consideration of the non-occupant co-borrower's income and obligations

Follow Agency guidelines and Agency selling guide documentation requirements and these MGIC guidelines.

The monthly housing expense is the sum of:

• Principal and interest (P & I)
• Property and flood insurance
• Real estate taxes
• Mortgage insurance
• Ground rent
• Special assessments (if more than 10 monthly payments remain)
• Homeowners Association (HOA) fees
• Monthly co-op fees net of utility charge
• Subordinate financing (3.05.03)

Note: When qualifying your borrower for MGIC mortgage insurance, we do not require you to include the mortgage insurance premium in the DTI calculation.

Follow Agency guidelines and Agency selling guide documentation requirements.

The monthly debt obligation includes, but is not limited to:

• Alimony/child support/separate maintenance payments. You may reduce the qualifying income by the amount of the alimony obligation in lieu of including it as a monthly payment in the DTI ratio calculation
• Business debt in the borrower's name
• Court-ordered assignment of debt
• Debt paid by others
• Deferred installment debt
• Federal income tax installment debts
• Garnishments
• HELOC payments
• Installment debt
• Lease payments
• Other real estate owned
• Revolving debt
• Student loans (see 3.12.03a for certain exclusions)
• Unreimbursed business expenses

Follow these MGIC guidelines:

All properties must be:

• Located within the US, the District of Columbia, Guam or Puerto Rico
• Attached, detached or semi-attached
• Held in fee simple or leasehold estate
• Meet the guidelines outlined in the sections below and in our Underwriting Summaries, 3.02

Properties with more than 20 acres:

• Maximum loan amount: $1,249,125
• Land value may not exceed 50% of the total value
• Require non-delegated underwriting (1.09)

We continuously monitor internal and external data to evaluate markets nationwide. At any given time, individual market conditions may require consideration that expands or limits the Underwriting Guidelines we publish in this Guide.

A single-family property not attached to other units. May include, but is not limited to, homes on individual lots, modular homes, factory-built or prefabricated homes, properties located in a planned unit development (PUD) and site condos.

Follow our Underwriting Summaries (3.02) and general property guidelines (3.13.01).

One of a series of single-family homes connected by common sidewalls forming a continuous group, such as a townhome or row house. Each unit may or may not be subject to the bylaws of a homeowners association (HOA).

Follow our Underwriting Summaries (3.02) and general property guidelines (3.13.01).

A unit in a condominium project whereby each unit owner has title to their individual unit, an individual interest in the project's common areas and sometimes exclusive use of certain limited common areas.

Follow Agency guidelines and Agency selling guide documentation requirements and these MGIC guidelines:

• MGIC maximum exposure: 33% of the total sold units in a project
• Ineligible: Manufactured housing units

A form of ownership where a corporation or trust holds title to the property and sells shares of stock representing the value of a single unit to individuals who receive a proprietary lease as evidence of title. Prospective owners typically must file an application for ownership that requires review and approval, including an interview, by the co-op board.

Follow Agency guidelines and Agency selling guide documentation requirements along with MGIC Underwriting Summaries (3.02) and general property guidelines (3.13.01).

Follow MGIC Underwriting Summaries (3.02), general property guidelines (3.13.01) and these additional guidelines:

• Property must be a legally permissible residence according to local zoning requirements
• A dwelling with separate living spaces must have:
• Separate entrances for each unit
• Public utilities metered separately for each unit

• A 2-unit property consisting of 2 separate dwellings on a single parcel:
• Must have a single tax key
• Each dwelling considered suitable for year-round occupancy
• Supported by Appraisal Form 1025/72 with at least 2 sales sharing the same functionality dated within 12 months of appraisal date

Follow MGIC Underwriting Summaries (3.02), general property guidelines (3.13.01) and these additional guidelines:

• The manufactured home must:
• Be classified as real property and held fee simple only
• Be double-wide or greater
• Have wheels, axles and hitch removed
• Be attached to a permanent foundation system, and meet local and state codes and the manufacturer's installation requirements
• Not have been moved from a different location other than the dealer or manufacturer's place of business
• Have the appearance, characteristics and functional utility of a site-built home
• Be permanently connected to public or private utilities and considered suitable for year-round occupancy
• Have either a HUD Data Plate or HUD Certification label affixed and clearly visible in an accessible location. If not available, a Label Verification Letter with the HUD Certification Label(s) information or an alternative IBTS letter are acceptable
• Previous additions/structural modifications must have evidence of compliance with state or local requirements or a licensed professional engineer
• Must be identified to MGIC as a manufactured home regardless of the property's designation as eligible for Fannie Mae MH Advantage or Freddie Mac CHOICEHome
• Appraisal requirements:
• Form 1004C/70B or full URAR
• Comparables should include at least 2 manufactured home sales
• Value may not include nonrealty items
• Ineligible
• Single-wide
• Leaseholds
• Condos
• Co-Ops
• Term over 30 years

Follow these MGIC guidelines:

• We'll consider rural properties under the same conditions as those located in suburban or urban locations when:
  • The appraiser deems the property's best use as residential
  • No income derived from the property is used for qualifying
• For properties accessed by a private road, see 3.13.11.03

Ineligible: Properties with nontraditional design (e.g., earth berm, geodesic, straw bale, constructed from a box car or shipping container).

Follow these MGIC guidelines:

• The property must comply with applicable federal, state and local laws, ordinances, rules and orders, including but not limited to, building codes and zoning requirements
• We may consider a property that does not comply in certain situations (e.g., it may not meet current local zoning requirements or is considered a legal non-conforming improvement due to ordinance changes since the property was constructed), in which case:
  • In the appraisal report, the appraiser should address any issue that impacts the marketability or market value of the subject property
  • The appraiser should provide at least 2 comparable sales with similar features or functional obsolescence

You are responsible for:

• The value as represented in the MI application
• Ensuring the property securing the loan is sufficient collateral
• Ensuring the property has no physical damage or environmental impairment at time of application

The market value should represent the most likely price the property would sell for when:

• The property is exposed to an open and competitive market for a reasonable amount of time
• The transaction is not subject to undue influence by any interested parties to the transaction by financial considerations or other similar incentives. This does not include costs traditionally paid by the seller in the market
• The buyer and seller are all motivated, informed and acting in their own best interest

Follow these MGIC guidelines:

• You must obtain an appraisal to establish the property's value
• You are responsible for:
  • Ensuring the correct appraisal report is used (3.14.02.02)
  • Selection and monitoring of qualified appraisers
  • Ensuring the appraiser has used sound reasoning and judgment when developing their opinion of market value
  • Ensuring the appraisal form used complies with Federal Housing Finance Agency (FHFA) Appraisal Independence Requirements
  • Confirming and documenting the owner of the subject property based on publicly available information
  • Disclosing to the appraiser all information about the property:
    • Condo or PUD fees
    • Non-realty items included
    • Environmental hazards at the property location or in the vicinity of
    • Soundness or structural integrity
    • Any items that impact safety
  • Disclosing all financing and sales concessions that have been granted by anyone associated with the transaction
• An appraiser must:
  • Describe the property and neighborhood factually and in specific terms
  • Consider all factors that may impact marketability or value
  • Be objective and unbiased in their opinion of market value
  • Complete the report according to the Uniform Standards of Professional Appraisal Practice (USPAP)
  • Legibly include their name, firm name if applicable, and state license number in the required field on the report
• Appraisals completed as anything other than as-is will be considered per the appraiser's recommendations indicated in the reconciliation portion of the appraisal report
• If we require more than 1 appraisal or a field review in addition to an appraisal, the lowest value reported will be considered the property value
• Appraisals must have a condition rating C4 or better
• Appraisals must have a quality rating Q5 or better

See our Rescission Relief Guide, mgic.com/gold-cert, for complete Valuation Defect Rescission Relief information (RRG 2.02).