So, we've all known that there are some major reforms coming on FHA insured loans this year. The FHA is operating in the red due to the number of foreclosures and needs to make some changes in order to keep things on track.
The changes are planned to roll out either in the spring or summer and include some of the following:
The upfront mortgage insurance premium (MIP) will be raised from 1.75 percent to 2.25
The FHA will also request legislative authority to increase the maximum annual MIP so it can shift some of the cost, as annual premiums are paid over time, proving to be less of a barrier for prospective buyers.
New FHA borrowers will also be required to come in with a 10 percent down payment if their FICO score is below 580; those with scores of 580 and above can still qualify for the 3.5 percent minimum payment.
The FHA will reduce allowable seller concessions from six percent to three percent, in line with industry standards.
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The official start date of the new UFMIP is April 5th.
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