According to this article the Federal Housing Administration is tightening the requirements for borrowers of FHA guaranteed mortgages. The changes will especially impact borrowers with lower credit scores as the minimum down-payment for those with less than a 580 credit score rises from 3.5% to 10%. Even borrowers with good credit will be hit by the increase in the mortgage insurance premium charged by FHA. This increase will add to both upfront closing costs and monthly costs over the life of the loan.
Even with these changes, intended to help the FHA avoid further financial distress, FHA loans are still a great option for many buyers. As of today at least one lender is still offering interest rates as low as 4.5% for qualified first-time-buyers using a 30-year, fixed-rate FHA loan. On top of that FHA loans still allow the use of seller assist to help cover closing costs and FHA loans can be used to purchase 2-4 unit buildings (duplexes, triplexes, and fourplexes) when the buyer intends to live in one unit and rent out the others (see my blog entry on that here). When the numbers make sense these multi-unit properties can be a great way to get started in real estate investing with relatively little money out of pocket.
If you have questions about whether an FHA loan makes sense for you or would like a referral to a great local lender give me a call or email.
Comments(0)