Changes in FHA Lending Guidelines

Here are some excerpts from an article in the L.A. Times dated April 25, 2010:

To better manage risk, increase capital reserves and ensure the long-term viability of the FHA insurance program, the agency has taken several steps that will, as Stevens bluntly put it, require "more skin in the game from borrowers."

Beginning this month, down payment requirements on FHA-insured loans have been increased. Although borrowers with credit scores of 580 or above will still be able to make the traditional 3.5% down payment, those with lower scores will need 10% down.

In addition, the upfront mortgage insurance premium has been raised from 1.75% to 2.25%. The premium can be financed as part of the mortgage.

Finally, the agency is reducing permissible seller concessions from 6% of the loan amount to 3%. This change conforms to industry standards, and means that even if a seller were to agree to, say, pay all of the borrower's closing costs, the borrower could count only that portion equal to up to 3% of the loan amount as if it were his own money.

To read the full article, please visit this link: http://www.latimes.com/business/la-fi-0425-lew-20100425,0,7739757.story?page=1