FHA mortgage changes take effect Jan. 1, 2009 for homebuyers

By
Mortgage and Lending with Guild Mortgage Co - Oak Harbor WA

This is part 1 in a series about FHA mortgage loans that affect buyers and home owners in the Eugene and Springfield Oregon area. FHA mortgage lending will undergo several changes on January 1, 2009. Some of them will affect more people than others.

  1. The down payment requirement on the FHA 203b and 203c will change from 3.0% to 3.5%.
  2. The FHA Secure will go away.
  3. The maximum loan amount for Lane County will change from $343,750 to $271,050 for a single family residence.
  4. FHA HECM (reverse mortgage) will be available for purchase transactions. Loan amount limit for the HECM will be $417,000, purchase or refinance, in Lane County.
  5. Reportedly, builders will no longer be able to steer borrowers to their "in-house" lenders with enticement of paid closing costs they will not give if another lender is used. (This is a change in RESPA but the reading on this is very complex.)
  6. This doesn't change, it already did - UFMIP (upfront mortgage insurance premium) changed from risk based premiums to 1.75% for everything except for FHA Secure and H4H and other exception noted below. (15 year term different.)

 At the same time, there are some things that don't change Jan. 1.

  1. Streamline refinances UFMIP is still at 1.5% with pro-rata refund on existing UFMIP if loan is less than 3 years old. Streamline refinance are available with or without a new appraisal.
  2. The streamline program does not have either the 3% or 3.5% requirement and may be up to 100% loan to value, including UFMIP.
  3. Down payment requirements for FHA 203k and 203h do not change from 3% minimum. The FHA Energy Efficient Mortgage is also not effected.
  4. Down payment may still be a gift or a qualifying down payment assistance program such as HAP or SHOP. No limit on combined loan to value when using community based second mortgage.
  5. Sellers may still contribute up to 6% of the purchase price for closing and prepaid expense (taxes, insurance and interest) costs.
  6. Non occupant co-borrowers can still be used to qualify a borrower for income. Credit problems cannot be overcome with a cosigner.
  7. Non traditional credit underwriting still available if no credit score is available.
  8. 550 credit score and above underwriting available.
  9. Double wide and single wide manufactured home FHA loans available. Homes require concrete foundations and tie downs. Pre-1975 (June 15) and homes on leased land not applicable.
  10. Cash out refinances are available to 95% loan to value, including manufactured homes.
  11. FHA loans are not just for first time home buyers.

Check back later for Part 2 in this series. I intend to share information that is not generally known in greater detail.

authored by Fred Chamberlin, senior mortgage consultant, Eugene/Springfield Oregon, 541-342-7576
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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Danny Thornton 12/23/2008 02:17 PM
Topic:
Mortgage / Finance
Location:
Oregon Lane County Eugene
Groups:
RealtorsĀ®
1st Time Buyers
First Time Homebuyer
FHAIdeasRoundTable
FHA 203-k and FHA 203-k Streamline Loan Group
Tags:
eugene
purchase
springfield
refi
real estate loan
203k
first time homebuyer
hud
secure
mortgage
fha 203b
eugene loan guy

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Ambassador
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Respect Realty LLC
Respect Realty LLC - Milwaukie, OR
Brokers - Oregon / SW Washington Real Estate

I think the best change is the closing cost to an in house lender. I've always hated builders and condo coversion projects that did that. I posted a RESPA question to the rain about it as I thought it really was wrong.

Todd Clark, Helping Families Home - www.IFoundYourNewHome.com

Dec 20, 2008 05:51 PM #1
Rainmaker
671,888
Sandy Shores FL RealtorĀ®, Melbourne Real Estate
M & M Realty of Brevard Inc. - Melbourne, FL
Brevard County Real Estate, Florida's Space Coast

Hey Fred, Good that the loan limits are changing, hopefully not a problem that the down payment amount is changing from 3.0% to 3.5%.  Here in our area, I believe the down payment amount changed on October 1.  Thanks for sharing - hope you are well!

Dec 20, 2008 11:46 PM #2
Rainer
173,065
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Todd - I agree with you on this one. I have never liked that.

Sandy - It will make a difference to a lot of people. On a $200,000 purchase, that is an additional $1,000. Still, it is a fantastic program even with the additional down payment.

Dec 21, 2008 02:24 AM #3
Rainmaker
2,190,577
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

I read an article from a Vitek mortgage broker in the Sacramento Bee today that said Fannie Mae and Freddie Mac loans will be at $417,000 in 2009, and that they are going up to $474,950 in some areas. Seems to me that in 2008, the maximum was $580,000 for an agency loan, and now that loan limit is actually going down to $474,950, not up. What gives?

Elizabeth Weintraub Land Park Real Estate Agent in SacramentoElizabeth Weintraub Land Park Real Estate Agent in Sacramento

Dec 21, 2008 04:05 AM #4
Rainer
173,065
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Elizabeth - $417,000 is the minimum conventional for any area. The maximums are figured based on median sales data. The FHA loans were under a temporary increase to help the housing market and then were changed to maximums, again based on the median sales data and since sales prices are going down, that hurt some areas.

Dec 21, 2008 04:40 AM #5
Rainer
333,723
Danny Thornton
R & D Art - Knoxville, TN
WordPress Guru

Fred, I am going to be interested to see what these changes do for shoppers. With the guidelines tightening on the new guidelines, I think that people are finally going to realize that they waited to long for the "GREAT DEAL".

Dec 21, 2008 08:41 AM #6
Rainer
173,065
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Danny - You might be exactly right. I keep telling people it is time to get on the band wagon before the tubas are gone.

Dec 21, 2008 08:48 AM #7
Rainer
11,627
Reno Loan Guy
FHA 203K & Homestyle Renovation Expert - Atlanta, GA

Good stuff as always Fred.

Sandy, the current 3% down payment could include a portion of closing costs and appraisal fees, the new down payment does not. The change is bigger than most think. In some higher cost states, like Georgia, most homeowners will actually be paying 1.25% more.

Dec 21, 2008 08:50 AM #8
Rainer
173,065
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Exactly right Jonathan, this can be a major change in some areas. Thanks for that information.

Dec 21, 2008 08:55 AM #9
Rainer
202,246
Greg Wilson
1st Cornerstone Realty - Schaumburg, IL

Thanks for the information in the post.  I'm always amazed at how much mortgages rules change.

Dec 21, 2008 09:12 AM #10
Rainer
173,065
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

That is one of the great things about this business Greg, you have to keep learning and reading.

Dec 21, 2008 09:21 AM #11
Rainmaker
1,087,281
Greg Nino
RE/MAX Compass, formerly RE/MAX WHP - Houston, TX
Houston, Texas

Fred - Thanks AGAIN for keeping us educated. I especally am interested in number 4! The sleezy buildres do this ALL the time here in Houston. I would love to know if that's the same for here. The 3.5% is the same or here...

I'm gonna call my loan officer tomorrow and inform him & her that an "outside lender' is once again keeping me up to speed on the good stuff!

Great blog sir!!

Dec 21, 2008 01:40 PM #12
Rainer
173,065
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Greg - I guess I am going to have to come down the Texas just so I can take care of things for you. I agree about #4, and hopefully this will change things.

Dec 22, 2008 02:53 AM #13
Rainmaker
409,300
Sal Poliandro - NJ Bergen County Realtor
RE/MAX Properties - Ridgewood, NJ
Short Sale Specialist - CDPE, SRES, SFR, IRES

Great post Fred!  Some very important and useful information in there!

Dec 22, 2008 07:39 AM #14
Rainer
173,065
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Thanks Sal, I hope to add quite a bit in my next two installments.

Dec 22, 2008 07:44 AM #15
Rainmaker
472,405
Janice Roosevelt
Keller Williams Brandywine Valley - West Chester, PA
OICP ABR, ePRO,Ecobroker

Question I had this morning, Fred, Maybe you know the answer. - if a first time buyers buy duplexes than the FHA will use the rent of one unit to qualify your purchase if you live in the other unit. Is that true? And what exactly does that mean? Would they need less for a down payment? kindly email jroosevelt@kw.com.

Feb 24, 2009 10:21 PM #16
Anonymous
frogg-legg

We hae be trying to close on a FHA loan for 63 days now. Our credit score is very good. This is the forth extention and on this last one is costing us 50.00 a day. Why is it that the underwriters are taking so long?  Why is it that the loan officer waits untill the last minute to get all the paper work in order?

Mar 31, 2009 01:02 AM #17
Anonymous
Rochelle

So far this site has been very helpful in answering my questoins, but one answer I cannot find anywhere online I'm really hoping you can answer!  Given your years in this industry, can you tell me when banks started the requirement of manufactured homes having to be newer that June 1976?  Even just a month and year would be helpful if you know!  Thank you!  :)

Apr 13, 2009 04:07 AM #18
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Fred Chamberlin

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