FHA Net Tangible Benefit Calculator

Road sign - better than beforeThe Federal Housing Administration (FHA) updated the underwriting criteria (rules) for the FHA streamline loan program on April 18, 2011.
The "net tangible benefit" is the most noticeable improvement.

New streamline loans originated after April 18, 2011 must show a 5-fixed-ratepercent reduction in the principal and interest of the mortgage payment plus the annual mortgage insurance premium (MIP), or if refinancing from an Adjustable Rate Mortgage (ARM) to a fixed-rate mortgage, the interest-rate must be reduced by at least 2 percent or be no higher than the current interest-rate.

The FHA Benefit Calculator will determine whether or not the new streamline loan meets the net tangible benefit criteria. Mortgagee Letter.pdf is a PDF file that you may download and print. Please send me an email if you discover a mistake, have a comment, or want to make a purchase.
9/2018 was the most recent update.

Net Tangible Calculator | UFMIP and MIP |

Loan Number
Case Number
Borrower Name
 
PASS or FAIL    
 
CURRENT AMORITIZATON TYPE  
PROPOSED AMORITIZATON TYPE
 
  CURRENT   PROPOSED
Amortization Term (Years)    
 
  CURRENT   PROPOSED
Enter 1st mortgage P & I payment    
Enter monthly mortgage insurance payment
 
T O T A L    
Difference  
 
  CURRENT   PROPOSED
interest-rate  
MIP Rate (ie - .85)
Combined Rate
Combined Rate Difference:  
 
BENEFIT TESTS   RESULTS   CRITERIA
Any ARM with <15 Mos to Pmt Change to fixed-rate New Combined Rate no more than 2% above the prior Combined Rate.
Any ARM with >=15 Mos to Pmt Change to fixed-rate
fixed-rate to fixed-rate     New Combined Rate at least .5% below the prior Combined Rate.
fixed-rate to 1 Yr ARM     New Combined Rate at least 2% below the prior Combined Rate.
Any ARM with >=15 Mos to Pmt Change to 1 Yr ARM
fixed-rate to Hybrid (Fixed) ARM
Any ARM with <15 Mos to Pmt Change to 1 Yr ARM     New Combined Rate at least 1% below the prior Combined Rate.
Any ARM with <15 Mos to Pmt Change to Hybrid (Fixed) ARM
Any ARM with >=15 Mos to Pmt Change to Hybrid (Fixed) ARM
Reduction in Term     The mortgage term is reduced;
The new interest-rate does not exceed the current interest-rate;

AND

The combined principal, interest, and MIP payment of the new Mortgage does not exceed the combined principal, interest, and MIP of the refinanced Mortgage by more than $50

 

Explanation of the net tangible benefit for a streamline refinance

The lender must decide that the streamline refinancing transaction, with or without an appraisal, provides a net tangible advantage to the borrower. Net tangible benefit is defined as: a 5% decrease in the principle and interest (P&I) of the mortgage payment plus the yearly mortgage insurance premium (MIP), or switching from an ARM to a fixed-rate mortgage.

Notes: A decrease in mortgage term is not a net tangible gain.

Lenders must regard the new hybrid ARM as a fixed-rate mortgage when refinancing to a hybrid ARM.

To qualify as a net tangible benefit, the new mortgage payment (P&I + MIP) must be at least 5% less than the mortgage payment of the refinanced loan. This criterion applies when refinancing from — fixed-rate to fixed-rate — ARM to ARM — Graduated Payment Mortgage (GPM) to ARM — GPM to fixed-rate 203(k) to 203(b), and — 235 to 203(b) (b).
SOURCE: FHA underwriting manual HUD 4155.1