FHA mortgages are a great option for borrowers who may not qualify for a conventional home loan. The FHA has announced that its plans to impose new regulations to loans that they back.
One of the major perks of an FHA home loan was that it only required a 3.5% down payment which is far less than most private lenders offer. FHA mortgages are also popular because they allow seller to contribute up to 6% for closing costs. Both of these perks for FHA-backed loans are about to change as the FHA has announced plans to alter some of their guidelines.
The FHA has announced plans to cap seller contributions for closing costs at 3%. In addition the FHA has announced that it will have credit requirements for the first time. Borrowers with credit scores less than 580 will have to pay a minimum 10% down payment and borrowers with a credit score less than 500 will not qualify for an FHA mortgage. The latter of the these two changes will not have an immediate effect on FHA loans because most lenders have already set their own credit floor around 620.
Total Mortgage has some of the lowest FHA mortgage rates in the entire country. A 30 Year Fixed FHA Mortgage is available with a 4.000% mortgage rate and a 5.178% APR.
Let us know how you feel about these new FHA regulations in the comment section below.
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FhaVsConventionalloan.com
July 23, 2010 @ 10:21 am
I think this is a great idea, I mean the whole 10% down for borrowers with credit score under 580. That way FHA will have less defaulting loans. I think FHA is trying to make these borrowers make a bigger commitment to the loan, that way they’ll be less likely to walk out of the mortgage.
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