Back in January I mentioned that there are going to be some significant changes on FHA mortgages. The first one that is going to happen is the increase of the upfront mortgage insurance premium from 1.75% to 2.25%. That change is effective with all case numbers that are ordered on or after April 5, 2010. If you are buying a home with an FHA mortgage in the next month or two, you may want to try and get the purchase agreement written before April 5th, so a case number can be ordered right away.
The other major change is the amount of allowable seller paid closing costs is going to be reduced from 6% to 3%. That change doesn't have an effective date yet, but is suppose to be early in the summer.
FHA also is looking at increasing the monthly mortgage insurance premiums, but has said if that is approved, they would lower the upfront mortgage insurance premium.
The last major change that affected buyers was that FHA now requires a credit score of 580 to have a 3.5% down payment. Anyone with a credit score of less than 580 will need 10% down. That doesn't affect too many people in this area as most lenders are requiring a 620 minimum credit score for any mortgage.
We are also seeing some investors capping the debt to income ratios on FHA loans at 50% which makes sense. Most people are not going over that any more, but it has happened – especially if only one person was on the mortgage but there was more household income available to make payments than was used in qualifying.
As we hear more changes, I'll let you know!!
