Analysis of FHA Changes

The Federal Housing Administration made some changes to how they do loans. Word is the changes are painful but necessary. Part of the problem is that the FHA had so few rules in the past and so many mortgages (up to 40 percent) originate with them.

Here are some of the changes:

  • Borrowers who get an F.H.A.-insured loan will soon have to pay a higher initial insurance premium. The new premium will be 2.25 percent of the value of the loan, up from 1.75 percent.
  • Sellers will no longer be able to help buyers to the same extent as in the past. The allowed support will drop to 3 percent of the value of the property, from 6 percent.
  • Many were surprised to see that changes have not been made to the required down payments. Borrowers are still only required to pay down 3.5 percent of the home; private lenders often require at least 15 percent.

You can learn more in the recent article in the New York Times (F.H.A. to Raise Standards for Mortgage Insurance).

Thanks to Senior Mortgage Banker Brian Sunder for sharing the news with Buyers Real Estate Group.

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