FHA Home Loan Guidelines – 3 Major Changes Coming!

FHA Home Loan Guidelines will be changing in the near future. They are a few changes that may cost you more to get a FHA Loan and may prevent you from qualifying for a mortgage.

Change To The Amount of Mortgage Insurance Premium Cost.

One of the biggest announced changes to the FHA Policy is to Mortgage Insurance Premium (MIP). Mortgage Insurance Premium will be increased to help build up the capital reserves and bring back private lending. The capital reserves have been depleted because all of the home foreclosures.

The first step of the change will raise the up-front MIP from 1.75{7bd3c7ad8bdfca6261de5ca927cd789e17dbb7ab504f10fcfc6fb045f62ae8d5} to 2.25{7bd3c7ad8bdfca6261de5ca927cd789e17dbb7ab504f10fcfc6fb045f62ae8d5} of the loan amount. They are also planning on asking Congress for legislative authority to increase the maximum annual amount of MIP they can charge.

If they get this authority from Congress then the next step will be to shift some of the premium increase to the annual MIP from the up-front MIP. The shift will help the capital reserves to increase without having much impact on the borrower because the annual Mortgage Insurance Premium is paid over the life of the loan instead at closing. This change should go into effect some time in the spring of 2010.

Change To Minimum FICO Credit Scores.

New borrowers with less than a 580 FICO score will now be required to have a 10{7bd3c7ad8bdfca6261de5ca927cd789e17dbb7ab504f10fcfc6fb045f62ae8d5} down payment. In reality most lenders are currently requiring at least 620 FICO score to quality for FHA’s 3.5{7bd3c7ad8bdfca6261de5ca927cd789e17dbb7ab504f10fcfc6fb045f62ae8d5} down payment. This will help FHA to balance its risk and to continue to provide funds to the borrowers that have performed well in the past. This change will be posted in the Federal Register this February and after a required notice and comment period it should go into effect some time in early summer.

There is an exception to the 3.5{7bd3c7ad8bdfca6261de5ca927cd789e17dbb7ab504f10fcfc6fb045f62ae8d5} down payment required by FHA.  HUD currently has a HUD $100 Down Payment Incentive if you buy a HUD foreclosed home.  You can get more information on this HUD $100 Down Payment Incentive by clicking on the links at the bottom of this article.

Reduction Of The Amount Of Allowable Seller Concessions.

The current allowable a Seller can contribute to Buyer’s closing costs is 6{7bd3c7ad8bdfca6261de5ca927cd789e17dbb7ab504f10fcfc6fb045f62ae8d5} of the purchase price. This will be changed to just 3{7bd3c7ad8bdfca6261de5ca927cd789e17dbb7ab504f10fcfc6fb045f62ae8d5} which is in more in line with industry standards on Seller concessions. This change also will be posted in the Federal Register in February and after a required notice and comment period it will probably go in effect in the early summer.

These changes in the FHA Home Loan Guidelines could cost you your chance of getting a low down payment FHA mortgage. But there is still time to beat these changes if you get find a home to purchase and get it under contract by early spring.  You can get more information about FHA Home Loan Guidelines by clicking on the links at the end of this article.

FHA Home Loan Program is a great way to finance your new home with a very low down payment of just 3.5{7bd3c7ad8bdfca6261de5ca927cd789e17dbb7ab504f10fcfc6fb045f62ae8d5} and low credit scores. But things are changing with the FHA Home Loan Guidelines, you need to take action now to find your dream home now!

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