FHA To Toughen Down Payment Rules

By
Real Estate Agent with Douglas Elliman Real Estate in Babylon NY

FHA To Toughen Down Payment Rules

The Federal Housing Administration will raise the minimum down payment for its least credit-worthy borrowers, agency announced Tuesday.

Borrowers with credit-rating scores below 580 will be required to put down at least 10 percent. Those with a credit score above 580 will be able to continue to put down only 3.5 percent. The changes are intended to shore up the agency's finances.

The FHA also will increase its upfront mortgage insurance premium from 1.75 percent to 2.25 percent. The agency is expected to seek congressional approval to raise annual mortgage insurance premiums, paid by borrowers over the life of the loan, above the current 0.55 percent maximum. The amount it will seek has yet been announced.

Comments (9)

Craig Rutman
Helping people in transition - Cary, NC
Raleigh, Cary, Apex area Realtor

Well that should make it much easier for those who are borderline to qualify!

Thanks FHA!

Jan 20, 2010 05:21 AM
Jackie Connelly-Fornuff
Douglas Elliman Real Estate in Babylon NY - Babylon, NY
"Moving at The Speed of YOU!"

Hi Craig, this is just another avenue for them to protect themselves against defaulters. Is there such a word? These tougher rules just keep on coming and coming. Sign of the times I guess. I think you should send Heather to teach 'em a lesson! :)

Jan 20, 2010 05:31 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Thanks for sharing this important information.

Press Release on FHA Changes:

http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-016

Jan 20, 2010 05:54 AM
Ellie McIntire
Ellicott City Clarksville Howard County Maryland Real Estate - Ellicott City, MD
Luxury service in Central Maryland

What next? So sad that new buyers are having to pay for the irresponsible lending of yesteryear.

Jan 20, 2010 08:32 AM
Jackie Connelly-Fornuff
Douglas Elliman Real Estate in Babylon NY - Babylon, NY
"Moving at The Speed of YOU!"

Hi Roy, you are welcome and thanks for the link!

Hi Ellie, I agree and I'm sure the saga will continue :(

Jan 20, 2010 09:08 AM
Toula Rosebrock
Diane Turton, Realtors, Forked River, NJ - Lacey Township, NJ
Broker/Sales Associate, Realtor, Lacey Township,

ToulaRosebrock,com

Hi Jackie:

Good information...

A bit disappointing that they are raising the insurance however.

Jan 20, 2010 12:30 PM
Jackie Connelly-Fornuff
Douglas Elliman Real Estate in Babylon NY - Babylon, NY
"Moving at The Speed of YOU!"

Hi Toula, it's all a domino effect. The banks get bailed out and the buyers get punished. So not right.

Jan 20, 2010 12:38 PM
Not a real person
San Diego, CA

I think everyone should be required to put down at least 10% downpayment on a home. No exceptions. That creates a certain pride of ownership and encourages the owners to take care of what they own and not abandon it if times get tough.

Jan 20, 2010 08:30 PM
Jackie Connelly-Fornuff
Douglas Elliman Real Estate in Babylon NY - Babylon, NY
"Moving at The Speed of YOU!"

Hi Russel, I have clients who have excellent credit ratings and are getting an FHA mortgage for income reasons. They both have full time jobs. They can easily pay their mortgage when we find them a home to purchase. The point is, is that I can see the banking rules getting tighter and tighter for people that have excellent credit. The banks created this mess due to them handing out no-doc mortgages left and right. And yes, there were people that knew they couldn't afford a mortgage and why didn't the banks catch onto this? I scratch my head on that one. :)

Jan 20, 2010 10:51 PM