FHA Major Lending Changes
February 2, 2010
The FHA (Federal Housing Administration), one of the federally backed mortgage insurers, announced some major changes on Jan. 20. The FHA will raise the minimum down payment for its least credit-worthy borrowers. Going forward, borrowers with credit-rating scores below 580 will be required to put down at least 10 percent. Those with a credit score above 580 will be able to continue to put down only 3.5 percent. The changes are intended to shore up the agency’s finances.
The FHA also will increase its upfront mortgage insurance premium from 1.75 percent to 2.25 percent. The agency is expected to seek congressional approval to raise annual mortgage insurance premiums, paid by borrowers over the life of the loan, above the current 0.55 percent maximum. The amount it will seek has yet to be announced.
Click here to see a summary of all changes from the National Association of Realtors.
