Is it about to get tougher to get an FHA loan?
It is according to the Chicago Tribune.
According to a story that ran today, look for FHA insurance (UFMIP and/or Monthly MI) and down payment requirements to rise for FHA loans soon.
Among the steps scheduled to be outlined today are greater down payment requirements and higher credit scores for consumers who seek FHA-backed mortgages.
Few specifics of the plan, designed to limit risks to the FHA’s loan portfolio, are expected to be divulged immediately. But it seems clear from testimony that Housing and Urban Development Secretary Shaun Donovan will give later today that home buyers are going to have to dig deeper in their wallets to purchase a home.
“We have made the decision to exercise our authority to increase the up-front cash that a borrower has to bring to the table in an FHA-backed loan to make sure that FHA borrowers have more “skin in the game” and a stronger equity position in their loans,” Donovan said in prepared testimony that will be given Wednesday afternoon to the House Committee on Financial Services. A copy of Donovan’s testimony was released Wednesday.
Donovan said he plans to provide more detail on the changes next month.
Currently, borrowers are required to have a 3.5 percent cash down payment.
While the FHA plans to increase minimum credit scores “for the time being,” it also is studying whether such an increase should be combined with other changes in underwriting requirements.
The agency also plans to seek permission from Congress to raise the annual mortgage insurance premiums.
One specific that Donovan is expected to offer is that sellers will be able to help buyers with only 3 percent, rather than the current 6 percent, of associated closing costs.
Regardless of what the details are that will “soon be announced” – one thing is clear:
It is about to get tougher to get an FHA loan.
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