Federal Housing Administration (FHA)-insured loans are a great way for people to get started in the housing market. It provides an alternative to conventional loans because it allows for little down (3.5%) and the minimum credit score requirements are more flexible. You can read about FHA versus Conventional financing here.
The Federal Housing Administration has recently announced that there will be upcoming restrictions, so the window of opportunity is tightening. An exact date for implementing these changes has not been set, but they are alluding to late spring/early summer.
I will keep you updated, but some of the highlighted changes include:
- The Upfront Mortgage Insurance Premium will increase from 1.75% to 2.25% (on a $400k loan, this translates to a $2000.00 increase)
- A lower credit score will require more down than a higher credit score
- Allowable seller concessions (which help pay for closing costs, the Upfront Mortgage Insurance Premium and any points to buy down the interest rate) will decrease from 6% down to 3%
All of these mean less opportunity and higher costs for you, so if you’re on the fence about buying, you should consider these changes in your analysis. And as always, please let me know if I can run numbers or help you with a pro/con assessment.
—
