Changes to FHA Lending in Brentwood, TN eff. 04/05/2010

Mortgage and Lending with SWBC Mortgage 740662

If you are thinking of buying, listing and/or helping someone buy a home inFederal Housing Authority Brentwood, TN and plan on using an FHA loan to complete the transaction you may want to remember some of the changes forthcoming in a few weeks.  Here are the three major changes:

Mortgage Insurance premium (MIP) will be increased from the current ratio of 1.75% of the loan amount to 2.25% of the loan amount.  This is on the upfront portion of the MIP.  This is typically rolled on top of the initial loan amount borrowed and financed over the life of the loan.  This is scheduled to go into effect with FHA case numbers assigned on or after April 5th, 2010.

The minimum credit score requirement for maximum funding (96.5% loan to value) will be set at 580.  A borrower with less than a 580 credit score will be limited to a loan at 90% loan to value.   This may be confusing.  Most lenders have imposed what they call a risk overlay and the minimum credit score required for an FHA loan is 620. 

There is a reduction to the allowed seller paid closing costs.  Currently they are at 6% of the purchase price.  They are going to be reduced to 3% of the purchase price.  This is in-line with industry standards and conventional lending practices.  In middle Tennessee you will find that total transaction costs rarely exceed 3% unless there is an origination fee or discount points on the loan.   

For more information on FHA lending in the Greater Nashville area please call Lee Barroll at 615-243-1301 or visit my website at


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