I wish the 286% increase is a typo on my part, however, this is one of the changes that may impact the housing market in the near future. The FHA minimum down payment, currently at 3.5%, is strongly anticipated to increase to 10%. This proposed change was mentioned last month by the Obama administration in a white paper report. It resurfaced last week in Denver, when FHA commissioner David Stevens attended the Realtor Rally at the Colorado Convention Center.
The impact of the increased down payment is simple to calculate. If a buyer is looking at a $200,000 home, under the current rules the down payment would by 3.5%, for a total of $7,000. With a 10% requirement, the down payment would increase by $13,000 to $20,000. Looking back at the FHA loans I have originated over the last few years, less than one in ten of the homebuyers I have worked with would have been able to raise this.
The monthly mortgage payment on FHA loans will definitely be increasing on April 18th by .25 percentage points. For a $200,000 mortgage, this will increase the monthly payment by $41.67.
Hopefully this information will help you make an informed decision if you are thinking of buying. Time is not on your side, it is your enemy. Now is the time to buy, if you are considering it. Your calls and emails are always welcome if you have any questions.
Best, Chip
Chip Allen
Crestline Mortgage Bankers
A Division of Universal Lending Corp
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