New FHA Guidelines – Coming Soon to Tucson
March 1, 2010 | By Kelley Koehler | Filed Under First Time Buyer, Loans and Financing
In an announcement earlier this year, HUD announced changes to FHA home loans.
Starting early April 2010:
- the upfront mortgage insurance premium will increase from 1.75% to 2.25% of the loan amount.
- seller contributions to buyer costs cannot exceed 3% of the purchase price, down from 6%.
- borrowers will need a FICO score of 580 or better to qualify for the 3.5% down payment.
FHA financing is incredibly popular with first time home buyers here in Tucson, though you don’t need to be a first time home buyer to get an FHA loan. A lot of first timers have good jobs, decent credit, but don’t have the cash savings for larger down payment amounts. Starting soon, those FHA home buyers are going to pay a bit more for the homes that they purchase. I don’t think these changes are going to bump a whole lot of people out of the market – at least that’s my opinion given the first time home buyers I typically work with in Tucson.
The Mortgage Report Man Dan explains it in greater detail here (who can now lend in Arizona, by the way).
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Is the reduction in the seller credit why you feel people will get people “bumped” from the real estate market? Or is it the credit scores?
Hi Doug – I wouldn’t say the credit score change so much as the credit reduction and the larger MIP. Each investor can select tighter credit score requirements, which – if I understand correctly – they already often do. Dan discusses investor overlays in his post more.