FHA Guideline Changes on April 5th, 2010
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.
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With 11 years in the lending industry, Ted is proficient in structuring the client’s loan to ensure that the client obtains the best financing. He has become a recognized leader in real estate education and hosts real estate seminars for his clients and the business communities in the Southwest. His attention to the details and in-depth knowledge of the loan process ensures that you are getting the best service possible.
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