Blog, Home Buyer Tips
New FHA Home Mortgage Guidelines for April 2010
February 3, 2010 by Doug Francis · 1 Comment
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David Stevens who is the Assistant Secretary for Housing – Federal Housing Commissioner had the FHA issue new guidelines on January 21, 2010 to help reshape the government insured home mortgage agency and how it offers low down payment loans to home buyers. It is a little boring or even dry for Washington D.C., but important if you are planning to use this type of financing to purchase a home.
- Impacts loans assigned on April 5, 2010 and beyond
- Upfront mortgage insurance premium of 2.25% (yes, it still can be financed)
- FICO Scores above 580 can put 3.5% down payment
- FICO Scores below 580 must put 10% down payment
- The maximum Seller concessions shall be 3% (that’s a closing cost credit to the Buyer)
- Increase Enforcement of FHA lenders (this has been going on for the last 18 months)
That is it in a nutshell, and if you want to read the HUD Mortgagee Letter 2010-2 or the HUD.GOV gripping press release then enjoy the read!
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The change with the biggest impact for me is the Seller Credit to the Buyer item. Going from 6% to 3% will impact a lot of moderate income buyers who may have saved up the cash they need for a 3.5% down payment but don’t have the cash they need for the closing costs. Don’t get me wrong 3% will still be a big help but the combination of lender fees, title company fees, State and County transfer and recordation fees, survey, etc. etc. It all adds up
Plus, let’s be frank, in the moderate income housing market, a financially qualified buyer is a prized catch. Even if the buyer had all the cash needed to complete the purchase, some additional closing help from the Seller could help pay down the interest rate making the home more affordable – a big plus.
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