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FHA PROPOSED CHANGES
Federal Housing Administration announced policy changes to help FHA manage its risk at the same time supporting the nation's housing market recovery.
The FHA (Federal Housing Administration) has proposed to take the following steps.
- Increasing the mortgage insurance premium (MIP) from 1.75% to 2.25%
- 2.25% MIP Example: if you have an FHA loan at $200,000 and a 3.5% down payment, your base loan amount is $193,000. The figured MIP would be approx. $4342.50 added to your base loan amount of $193,000 to have a new loan amount of $197,342.50
- 1.75% MIP Example: FHA loan at $200,000, 3.5% down payment, MIP figured is $3377.5 for a new loan amount of $196,377.50
- New borrowers will now be required to have a 580 FICO score to qualify for the 3.5% down payment. New borrowers with less than the 580 credit score will need to put down at least 10%. This is proposed to go into effect early summer.
- Allowable seller concessions from 6% to 3%. This is proposed to go into effect early summer.
REMINDER: TAX CREDIT DUE TO EXPIRE IN COMING MONTHS, homebuyers must buy or enter into binding contract to buy a principal residence on or before April 30th, 2010 and close by June 30th, 2010.