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MGIC Making Investor Properties Insurable

Under certain circumstances, MGIC Guaranty Insurance Corp.. will provide mortgage insurance coverage on residential properties that are owned by investors.

An upcoming change to its requirements will allow loans used to finance the purchase of investor properties to be insured.

Loan-to-value ratios on MGIC-insured investor loans can go as high as 85 percent, and the minimum borrower contribution is 10 percent.

Seller contributions are limited to 2 percent, and borrowers need a minimum of six months’ reserves.

The Milwaukee-based firm outlined the changes in MGIC Bulletin #01-2014. They go into effect on May 19.

“These loans will require an MGIC underwrite,” the notice stated, “and while they are not eligible for our Go! program, investment property loans that receive a DU Approve or an LP Accept response may follow the respective AUS documentation requirements for employment, income and assets.”

Acceptable properties are one-unit, single-family, detached homes. Unacceptable properties include attached, condos, co-ops and manufactured homes.

The maximum loan size is $417,000 except in Alaska and Hawaii — where it jumps to $625,500.

Borrowers on such insured transactions can have debt-to-income ratios that are as high as 45 percent.

The mortgage insurer said borrowers on investor transactions must have a credit score of at least 720.

MGIC will insure up to two loans per borrowers as long as one is the primary residence.

Excluded from the program are construction-to-perm and rehabilitation-renovation loans.

Nontraditional credit is ineligible.

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