Now is better than later-FHA changes are coming
Wednesday, February 3, 2010
We all know about the $6,500 or $8,000 federal tax credit for people who buy a home, and are in contract by April 30th. But there are more reasons not to wait. FHA buyers will not be able to get all the same benefits as new regulations are passed.
One biggie: the seller will only be able to contribute 3%, not 6% towards closing costs. Another: not everyone will get the low 3.5% down payment.
New Rules for FHA Borrowers
The Federal Housing Administration (FHA) recently outlined future changes to the FHA home loan program. The changes first were proposed last month by Secretary of Housing and Urban Development (HUD) Shaun Donovan.Rising defaults on FHA loans have led to the FHA’s cash reserves falling below federally mandated levels. FHA officials hope that policy changes will ensure borrowers have a stronger equity position and are less likely to default.
Policy changes include:
–Raising the up-front mortgage insurance premium: The premium will rise to 2.25 percent from its current 1.75 percent. HUD is expected to release a Mortgagee Letter on Jan. 21 making the premium increase effective in the spring.
–Raising the minimum credit score requirements: New borrowers will be required to have a minimum FICO score of 580 to qualify for the FHA?s 3.5 percent down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10 percent. FHA expects this to take effect in early summer after it goes through the normal regulatory process.
–Reduce allowable seller concessions: The agency is lowering the maximum permissible level to 3 percent from its current 6 percent limit. FHA expects this to take effect in early summer after it goes through the normal regulatory process.
More info
http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-016
