FHA Loan Articles
News, updates, and explanations to keep you informed.
FHA Policy Changes You Should Know About
Anyone shopping for a new home and interested in an FHA loan should be aware of several changes to FHA loan requirements now in effect or scheduled to take effect soon. Those who have purchased a home before will notice some important changes in FHA rules that affect not only the cost of FHA loans, but also how an FHA loan can be applied for and approved.
For borrowers, one of the most important alterations to FHA loan requirements is in the area of credit scores. New FHA borrowers must have a minimum credit score of 580 to qualify for the FHA's most favorable down payment plan, currently at 3.5%. Borrowers with credit scores of less than a 580 FICO score will be required to put at least 10% down. It's important to understand that having a credit score of less than 580 does NOT disqualify applicants from getting an FHA loan, but the down payment requirements are stricter under the announced guidelines.
Up Front Mortgage Insurance premiums have increased to 2.25% for all FHA case numbers assigned after April 5th, 2010 for purchase money mortgages, plus the FHA's Streamline Refinance program and full-credit qualifying refinances.
Seller concessions have also changed. The FHA has lowered seller concessions from 6% to 3% in a move FHA officials say is designed to eliminate the temptation to inflate the appraised value of a home for sale.
Another important change involves increased transparency in the FHA loan process. FHA lenders are now subject to a "neighborhood watch" program which, according to the FHA, reports "lender performance rankings to complement currently available Neighborhood Watch data." This information is available on the Department of Housing and Urban Development's official site. The website lets the public view a lender's loans and how many are delinquent or seriously delinquent, giving a snapshot of that bank or lender's financial health.
This neighborhood watch program is part of a larger plan to increase enforcement and monitoring of FHA lenders to insure full compliance with FHA loan requirements and FHA regulations. According to an FHA press release, a proposed Amendment of the National Housing Act also requires "all approved mortgagees to assume liability for all of the loans that they originate and underwrite."
FHA NEWS and RELATED ARTICLES
When applying for an FHA home loan, some lenders may ask for tax paperwork as part of the application process. Some borrowers may wonder if this is legal, or an acceptable practice for home loans in general.
There are many questions about the official FHA loan rules for occupancy for single-family home loans. According to FHA rules, a borrower must occupy the home purchased with a single-family FHA loan as a personal residence as a condition of loan approval.
After the housing market crisis of the previous decade, many mortgage borrowers found themselves having trouble making their monthly payments. In some cases, borrowers just walked away from the mortgage completely and allowed the home to be foreclosed upo
The FHA has announced it would accept electronic signatures (also known as e-signatures) on several FHA home loan documents. The new policies are found in detail described in FHA Mortgagee Letter 14-03.
Some of your FHA loan closing costs may be financed, and some may--after being negotiated between buyer and seller--be paid by the seller within the boundaries of the FHA loan programís rules. The borrower can also pay some closing costs out of pocket.