FHA Changes Being Announced Today, Including Higher Down Payments.

WaPo story HERE.

As of 6 AM Wednesday PST HUD had not yet posted the proposed regulations referenced in the news story. Once HUD posts the proposed regulatory changes, I will do a new post with a link to the actual proposed regulations.

(Changes seem likely to drive rush to get FHA loans approved before changes go into effect, no?).

Summary of changes from WaPo story:

"Under this plan, the agency would increase the up-front insurance premium that borrowers pay at the closing table from 1.75 percent to 2.25 percent of the loan's value starting this spring.

While most FHA borrowers can continue to make down payments of as little as 3.5 percent when they take out a loan, those with a credit score of less than 580 will have to make a down payment of at least 10 percent, possibly starting in the early summer.

The agency also plans to propose limits on the amount of money sellers can kick in, including by paying closing costs or giving free upgrades. The agency will reduce seller concessions from 6 percent to 3 percent of the home's value...These new initiatives do not require congressional approval, but the proposed seller concessions and the tougher down payment requirements calls for a public comment period. Minor changes could be made based on the feedback.

The agency is also asking Congress for authority to raise the limit on annual premiums that FHA borrowers must pay. If approved, the move would allow the FHA to shift some of the upfront premium increase to yearly premiums. That would boost the agency's capital levels but put less burden on consumers because the annual cost is spread out over time, officials said.

Originally created and posted on the Oregon Housing Blog.