Proposed FHA Loan Changes Make Buying a Home More Expensive
Posted on | February 8, 2010 | Written by: Diane Donnelly
Proposed FHA Loan Changes Make Buying a Home More Expensive.
The Housing and Urban Development (HUD), has made the much anticipated, official announcement regarding changes to the  popular Federal Housing Administration (FHA) loan program.Â
The proposed FHA policy changes are detailed below:
1. The up front mortgage insurance premiums will be raised .50 point to 2.25% of the mortgage amount. They anticipate the change to be effective this spring.
2. Minimum credit score will be 580 to qualify for the low 3.5% down payment. If your credit score is lower than 580, you will be required to put a minimum of 10% down. They anticipate the change to be effective this summer.
3. This is a BIG one! They may reduce the closing cost assistance they allow the seller to pay. Under current FHA guidelines, the seller can pay up to 6% of the sales price toward a buyers closing costs. They are looking to reduce the contribution to 3%, meaning a buyer will have to come up with the additional 3% (approximately).
To see the full press release from HUD, go to http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-016
If you are looking to move or know someone who is, please forward this update to them as it will be considerably more expensive to buy a home once these changes take place. For example, on a home purchase in the amount of $300,000, once the changes are implemented, a buyer will need approximately $15,000 more assets than they do today. One more reason not to wait to buy your home.
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Tags: buyers > closing costs > credit scores > FHA loan > HUD > sellers
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