I am in the middle of listing a condo priced under $200,000. This unit is perfect for a FHA buyer. So, I am learning about the new FHA rules that took place this year.
The minimum down payment increase to 10% down for borrowers with a credit score of 580 or below. The upfront mortgage insurance premium is to be raised to 2.25% from 1.75% (which requires congressional action). It also reduced seller's contribution from 6% to 3%.
For those with not-the-best-credit will be impacted with the 10% down payment, and also the reduced seller concessions which often pays for closing costs like title insurance and lender origination fee.
However, these changes are meant to manage a healthier FHA which accounts for about 40% of national mortgage market. It is going to make a stronger FHA capital reserve, and be able to manage risk better than in the past.
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