FHA Loan Changes
The Federal Housing Administration announced recentlyÂ proposed changes to its program.Â These changes will impact who can and cannot be able to use this as a financing option beginning as soon as Summer 2010.Â The appeal of an FHA loan is the minimum 3.5% down payment amount and if these changes go through someone with a lower credit rating will probably not be able to use this program, therefore eliminating a large pool of buyers.
A brief summary of a couple of the proposed changes is below:
The Federal Housing Administration will raise the minimum down payment for its least credit-worthy borrowers, the agency announced Tuesday.Â The change is among a number of major changes the FHA is making to ensure its long-term financial soundness.Â Borrowers with credit-rating scores below 580 will be required to put down at least 10 percent. Those with a credit score above 580 will be able to continue to put down only 3.5 percent. The changes are intended to shore up the agency's finances.
FHA also is planning to increase its upfront mortgage insurance premium from 1.75 percent to 2.25 percent. The agency is expected to seek congressional approval to raise annual mortgage insurance premiums, paid by borrowers over the life of the loan, above the current 0.55 percent maximum. The amount it will seek has yet to be announced.
My advise is if you were planning on buying with an FHA loan NOW IS THE TIME.Â Get your pre-approval, find a property and get your loan application started before this and the $8000 first time homebuyer credit are gone.