My take on the new FHA guidelines...
I don't think the higher upfront MIP will be that big of a deal. It is only $724 more on a sales price of $150,000. Not much change in the monthly payment. I also don't think the 580 credit score is that big of a deal. I don't know of any lenders who would do a manual underwrite on that and approve it. Most lenders are at either 620 or 640 already. Manual underwrites are just about totally gone. In my opinion getting a loan approved and closed with a 580 score is almost impossible.
I think the seller concessions being reduced to 3% will have the biggest impact. Look at it this way...a person is buying a home for $150,000 and using FHA. They most likely don't have a lot of money that is liquid (we are leaving out gifts for this post). In the past the seller concessions could pay the buyers prepaids or at least a good chunk of them. Between seller concessions and earnest money, the buyer does not have to come out of pocket for much more than the down payment; and maybe less than the down payment at closing. With the reduced SC, the buyer will have to cover his/her prepaids. That could be $1000 - $2500 more than the buyer has available. I think the reduced SC will really hurt some potential buyers. Your thoughts are welcomed.
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