HUD announced some big changes recently and it is important to know when these changes are scheduled to be implemented. This can serve as a rough guideline for you as you bring homes under contract in the coming months. Buyers should be aware that things are changing if they are using FHA.
1. Increase in the Up Front Mortgage Insurance Premium to 2.25% of the loan amount from 1.75%. This is usually financed and HUD expects this to go into effect in the spring.
2. Down payment remains at 3.5% of the sale price unless the credit scores are below 580. Not many lenders are approving loans with credit scores lower than 620, so this should have little effect when is goes into effect in early summer.
3. Seller concessions to be reduced to 3% from 6%. There will be a notice in the Federal Register in February, followed by a comment period. It is expected to take place in early summer, so those looking at the First Time Home Buyer at credit should largely be unaffected.
4. HUD hopes to have the annual Mortgage Insurance Premium increased by legislative authority. This would affect the monthly payment. No timetable is set for this item.