FHA, the most popular loan program available is going to change soon.
- FHA currently allows the buyer to put as little as 3.5 percent down. Changes in FHA guidelines will require that the buyer put at least 5 percent down-a significant increase of cash reserves required of the buyer at the closing table.
- Another FHA guideline set to change is that a one time, up front mortgage insurance premium will increase from 1.75% 2.25% of the loan amount.
- The monthly mortgage insurance is going to increase. This insurance is calculated by multiplying the base amount of the loan times .055 and then dividing that number by twelve. The exact increase is unknown but may go up to as much as .1 rather than .055. This insurance is mandatory for 5 years on FHA loans.
- Some real estate experts say that FHA guideline changes will happen April 5th 2010. Others sources like Realty Track claim changes will take place in the summer.
- Another important FHA guideline change is that the maximum allowable seller credit has been reduced from 6 percent to 3 percent. So, the buyer will have to come to the closing table with more cash because sellers can only credit the buyer (at close) up to 3 percent for closing costs. (rather than 6 percent)
