The lending industry is constantly changing. This year new changes are coming to the FHA loan. The good news is that FHA is keeping the low down payment of 3.5%. Here are a few of the upcoming changes:
- Upfront mortgage insurance premium is increasing to 2.25%. Previously it was 1.75%. FHA will continue to allow buyers the option of paying the premium upfront or financing it into the loan.
- Borrowers with a credit score below 580 will need a 10% down payment. All other borrowers will be able to stick with the 3.5% minimum down payment.
- FHA is looking to increase the annual premium which is currently capped at .55%. By increasing this number, the upfront MIP may be reduced. (Note to the consumer: The annual premium affects the MIP that is added to your monthly payment.)
- Maximum seller concessions will be limited to 3%. (Previously sellers could contribute up to 6% towards the buyers settlement fees.)
When will the changes go into effect? The upfront MIP increase will be implemented in Spring of 2010. FICO Score and down payment requirements will be implemented in the Summer of 2010. The seller concessions change will start in the Summer of 2010.
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