FHA Loans are Changing Again, Costs of Borrowing Increase

Real Estate Agent with Asset Realty Group

Effective April 5th, the new requirements go into effect for FHA Loans.  Buyers having a credit score below 580 the down payment is now increased to 10% of the purchase price. The lowest credit score for an FHA buyer to qualify is 580 and most lenders will not even consider FHA if the credit score is below 640.

Another change is the upfront mortgage insurance premium that accompanies an FHA loan, that increases from 1.75% of the loan amount to 2.25% of the loan amount. This is financed into the loan so it will increase the PI payment slightly.

After April 5th the allowable closing costs that could be covered by a seller concession will go from 6% to 3%. It would be the extreme case where a seller would allow as much as 5 or 6% anyway, so the new 3% limit is more realistic to what is happening in the market, so this isn't a big deal.  Gift funds for the down payment are still allowed.


Comments (1)

First of all FHA does not allow you to pay for certain fees, but watch out the Lender just remenas them ok?You should be consulting with your Realtor and it should be in writing on the sales contract so the lender knows how to process and close the loan.The Sales Contract should contain EVERYTHING in writing.All you have to do, is tell your agent you want the maximum amount of seller credit allowed to be written and offered in the contract. If your agent doesn't know how much this amount is, he/she should contact a loan officer to find out.If your agent advises you against this, ask why? If you aren't satisfied with this answer, tell your agent you would like to find another agent you feel more comfortable with and you'll prob. have to sign something, go to the broker of the Agent if you get any crap. Your agent is getting a commission prob. 3% of the sales price, so you are paying your realtor to work for you in your best behalf.On the flip side of the coin, think about how bad you want this place. The worse the sellers can do is come back with a counter offer or reject your offer, more likely they'll counter.Good luck. Was this answer helpful?
Jul 20, 2012 12:43 AM