Skip to main content
  1. News
  2. Business & Finance
  3. Personal Finance

Changes to FHA lending

Down town Kansas City MO courtesy fprec.comThis morning, in an interview with Diana Olick of CNBC, David Stevens (the FHA Commissioner) discussed changes coming to FHA this summer. Besides a slightly higher down payment and stricter underwriting criteria, FHA is increasing their upfront mortgage insurance premium from its current 1.75% to 2.25% on all applications received on or after April 5, 2010.

However, not all news is bad news. Under the FHA Reform Act of 2010, anyone with a credit score between 500 and 579, and at least a 10% down payment, can probably obtain FHA financing. Additionally, purchasers with 5% or 10% to put down on a home could see lower mortgage insurance premiums.

Other changes include decreasing the amount of seller contributions allowed from the current 6% down to 3%, and increasing the down payment amount to a straight 3.5% of the purchase price. When compared to conventional loans, these changes make FHA loans a more expensive loan option.  Even so, many first time home buyers have trouble obtaining the 5% down payment required on conventional loans.  FHA calculations estimated a reduction of 40% in loan originations it they were to implement a 5% down payment option.

While FHA loans only account for about one-third of all home loans, it is estimated that 51 percent of African American home buyers and 45 percent of Hispanic families who purchased homes in 2008 used FHA financing. Today, many home buyers look to the FHA 203K loan in order to purchase and repair bank foreclosed and distressed properties.

To find out more information on FHA loans go to the HUD website or send your questions to aeaton@fprec.com.

Comments

  • MitraJanine 4 years ago

    Homeowners' insurance isn't a luxury, it's a necessity. In fact, most mortgage companies won't make a loan or finance a residential real estate transaction unless the buyer provides proof of coverage, contact me for free home insurance quote www.bit.ly/ajc5p7

Advertisement

News

  • Baseball Hall of Fame
    The Baseball Hall of Fame in Cooperstown welcomes six new inductees
    Video
    Video
  • 2012 do-over
    If we were to re-do the 2012 election, a new poll suggests Romney would win
    Politics
  • Boko Haram
    Boko Haram kidnaps the wife of the vice prime minister of Cameroon
    World News
  • Ceasefire breaks
    Israel's Benjamin Netanyahu claims Hamas broke another brief ceasefire
    Gaza
  • Close call with CME
    Scientists tell how Earth survived a giant solar flare back in 2012
    Space
  • Comic-Con
    What's going on at Comic-Con? Get all the latest updates here
    Comic-Con