• Beginning in the spring, borrowers will be charged an upfront fee of 2.25 percent for mortgage insurance, instead of 1.75 percent.
• The FHA will ask Congress for permission to raise the about they charge annually for mortgage insurance.
• FHA mortgage applicants with credit scores below 580 will be required to make a down payment of at least 10% of the home’s purchase price. Previously, most borrowers were allowed to make down payments as low as 3.5%
• Sellers may only make closing cost “concessions” of 3% instead of 6%.

The new FHA regulations will make buying a home more difficult for some borrowers. But, they are still able to offer the most lenient terms available in the recession housing market.

photo credit: TheTruthAbout…

See Also:

FHA Basics

Fannie Mae and Freddie Mac Conforming Loan Standards

Fannie Mae and Freddie Mac are Government Sponsored Enterprises (GSE) that set the lending standards used by banks. They set terms such as limits on the maximum loan amount, down payment requirements, credit score requirements, and more. When banks make loans that meet these standards, they are called “conforming loans.” Banks are always able to sell conforming loans to other lenders or to Fannie Mae / Freddie Mac. Lenders view these loans as safe because they all meet the same lending standards.

If you cannot meet the conforming lending standards (i.e. your needed loan exceeds the limit or you have a poor credit score), a bank may still be willing to give you a mortgage. Instead of using the standards set by the GSEs, the bank will use its own requirements. The bank will not be able to sell your non-conforming mortgage to Fannie Mae or Freddie Mac. It may also have a more difficult time selling the mortgage to other lenders. Because of the perceived risk of default and the difficulty of selling your loan on the secondary market, the bank will give you a higher interest rate. Read more…