Securing an FHA mortgage is about to get more expensive.
In a statement issued Wednesday, the Federal Housing Authority outlined policy changes to its mortgage assistance program. The shift is meant to both reduce the government group’s portfolio risk while strengthening its overall financials.
For consumers in Texas, the changes mean higher costs.
There are 3 major guideline updates for the FHA:
1. Upfront mortgage insurance premiums are increasing to 2.25% from 1.75%
2. Minimum down payments for applicants with 580 FICOs are rising to 10%
3. Seller concessions are being limited to 3%, down from today’s allowable 6%
Furthermore, FHA has appealed Congress to raise an FHA borrowers’ monthly mortgage insurance premiums.
As a result, homebuyers in Houston, Sugarland, Pearland, Katy, Woodlands should expect tougher FHA underwriting in 2010. Not because the FHA says so, necessarily, but because banks don’t want to do “bad loans”. Lenders are incented to turn down at-risk applicants and, already, we’re seeing examples of this. Despite FHA allowing 580 FICOs and lower, many banks have made 620 their minimum.
Some have other guideline overlays, too.
The FHA’s new guidelines don’t go into effect until spring. So, between now and then, the old guidelines will apply. Therefore, if you know you’re going to need an FHA home loan in the next few months in Texas, consider moving up your time-frame.
If nothing else, you’ll save some money at closing.
Contact Network Funding in Houston to Qualify for Your FREE FHA Home Loan Approval Today!
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