The Federal Government has imposed stricter guidelines for FHA loans. According to the latest news:
“The Federal Housing Administration on Wednesday announced stricter requirements for its loans, with buyers paying higher insurance premiums and having access to less cash from sellers for closing costs.
Also, borrowers who want to put the minimum 3.5 percent down for FHA loans must have credit scores of at least 580. Those with less than 580 will have to put down at least 10 percent. Previously, FHA did not require a minimum credit score.
FHA loans are popular with many first-time buyers because of the low down payment requirements.
Under the new rules, insurance premiums will be 2.25 percent of the value of the loans. That’s up from 1.75 percent.
The most sellers can contribute to buyers’ closing costs will drop to 3 percent of the value of the home. The percentage now is 6 percent.
FHA Commissioner David Stevens said in a statement that the changes will strengthen the agency’s capital reserves and allow it to continue to provide homeownership for many Americans.”
“Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important,” Stevens said. “When combined with the risk management measures announced in September of last year, these changes are among the most significant steps to address risk in the agency’s history.”