Change are coming to FHA loans

The Federal Housing Authority announced yesterday that they are going to be tweaking the guidelines for an FHA loan. Here are the tweaks:

1. The upfront mortgage insurance premium is going to be raised from 1.75% to 2.25%. This fee will still be financed into the loan, but the cost to the borrower is going to be $500 for every $100,000 borrowed. (They also asked for permission to raise the monthly mortgage insurance premium. If they raise the monthly premium, they might lower the upfront premium. We are not sure exactly how this is going to work.)

2. Set a minimum down payment of 10% for any borrowers with a credit score under 580. The impact of this is zero because banks stopped doing loans for borrowers under 620 over a year ago.

3. Reduced the maximum seller concessions from 6% to 3%. Getting 6% from the seller was not necessary anyway. 3% should be plenty.

We will find out the dates of these changes later.