New Criteria for FHA
FHA Recent Announcement on Policy Changes
The Federal Housing Administration announced today that FHA will be taking active measures to address risk and strengthen finances by announcing policy changes that will affect future FHA loan files.
These changes include: Increasing Mortgage Insurance Premium to build up capital reserves. The first step will entail an increase to UFMIP by 50 basis point (2.25), with a follow up request to legislative authority to increase annual MIP. HUD is scheduled to release a Mortgagee letter tomorrow that will be in effect in early spring.
FHA will also implement a New Credit Score requirement for all borrowers. All borrowers must have a minimum score 580 in order to qualify for minimum down payment of 3.5%, any borrowers with scores less than 580 will be required to bring in a minimum of 10% down payment. These changes will be effective in early summer of 2010. Check with local lenders because their credit score requirements may be higher than FHA's
Lastly, HUD has announced they will reduce allowable sellers concessions from 6% to 3%.What this means to you is, if the Seller is paying closing costs, their contribution is limited to 3%. You the Buyer would have to pay the difference. Closing costs are really a Buyer expense and it became customary in the past for Seller to pay or at least contribute to them. Looks like things are changing. Besides the Sellers have already taken a hit on their price.
This change will be posted in the Federal Register in February and will be effective in early summer of 2010.
Click here for details: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-016
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