FHA Guideline Changes on April 5th, 2010

And if you think things could get any tougher for an FHA borrower!

In an effort to tighten up its latest embarassment, (FHA’s balance sheet and dwindling capital reserves), the Federal Housing Authority is rolling out sweeping financial changes that can affect you or your customers. FHA borrowers will need to look better on paper and be better credit risks moving forward in 2010.

To boot, Mortgage insurance premiums are rising from 1.75% to 2.25%.

Changes Effective April 5, 2010

In its official announcement, the FHA stated it is attempting to better position itself to “manage its risk while continuing to support the nation’s housing market”.

The changes are effective with case numbers assigned starting April 5, 2010.

One of the changes that is pending further review but has yet to come to fruition – the increase of the FHA minimum downpayment. Homebuyers in Phoenix and throughout the country will still be able to purchase a home with putting only 3.5% percent down. However, the group did roll out a number of other changes, including:

An increase in Upfront MIP from 1.75 percent to 2.25 percent
Currently under review and within the comment period is the reduction in maximum seller contributions from 6 percent to 3 percent. This is expected to take place by mid-summer.
A Congressional request to increase monthly mortgage insurance premiums (Still in discussion).

Furthermore, the FHA’s new guidelines institute a minimum FICO requirement of 580 to make the minimum 3.5% downpayment, requiring 10 percent for any applicant whose credit score falls below that level. However, many lenders are not approving a borrower with a FICO score less than 620, which has come to be known as Guideline Overlays.

ABOUT TED CANTO Ted is an experienced Mortgage Advisor for the last 13+ years and is also known for his mortgage commentary and internet workshops within the real estate community. Also known as "The Mobile Mortgage Pro", Ted has honed the power of the smart phone, laptop, tablet computing, text, email and social media to ensure that he is always accessible to his clients' “wherever, whenever” to meet their needs. Ted has helped thousands of families finance their new home or refinance their current home in the Arizona and California market. Call, text, or email him to discuss your home financing @ 480.650.8602 or ted@tedcanto.com