bankingMoses Lake January 20, 2010

New FHA Requirements and How it Will Affect You

So today the Commissioner announced some changes that are in the pipeline for FHA mortgages.  Since I would say today in our area 3 out of every 5 mortgages are FHA this will impact a lot of us in this area.For new borrowers to qualify for a loan if they have a 580 credit score they must now put 3.5% down on the transaction.  For someone with a lower score they will have to come up with 10% down on the home.

The FHA has decided to raise up front mortgage insurance costs from the borrower from 1.75% to 2.25%.  They are also requesting permission to increase the maximum MIP that they can chargeDoes it suprise you that an insurance company wants to increase rates?  Doesn’t suprise me a bit!j0432728

 For new borrowers to qualify for a loan if they have a 580 credit score they must now put 3.5% down on the transaction.  For someone with a lower score they will have to come up 10% down on the home.

The bigger change is that sellers can now only contribute 3 % on an FHA sale which is down 3% from what we’ve normally used at 6%.  It seems they want buyers to have a bigger financial stake in their home by them having to actually put money into it upfront.

FHA loans have gone from a low of 3% of all totals loans to now a high of 40% of all loans.  Here in Grant County that is now probably a estimated of about 75% of all loans so this will impact a majority of our loans in some way.

The biggest impact we will see in our area from this is the loss of 3% of seller contributions.  Some people to qualify for a loan need the full 6% to actually qualify for the loan as they don’t have all the needed cash to close.  This will affect how many buyers are out there buying homes here in Moses Lake.