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I hear changes are coming from the FHA this spring with the goal to help solidify the finances of this benefical governmental program. But what are they going to do??

The FHA program is an alternative and widely accepted source of securing funds for a home purchase and  provides funding for homes for folks that may not otherwise be able to get the opportunity for home ownership. Here are a few changes that I have noted:

Credit Score and Minimum Down Payment- A credit score of 580 and above will still allow you to put down a minimum down payment of 3.5%. A score below that will require a 10% down payment.

Sellers Concessions- This is when you can roll in part of your closing costs into the purchase price to eliminate "out of pocket" expenses at the closing. Currently the guidelines allow for a 6% contribution, the requested changes will allow for only 3%. For example, if you were buying a home with an agreed upon sale price of $150,000. currently, you could roll in 6% ( or $9,000) into the price for a true purchase price of $159,000. Of course, the home would have to appraise out for this higher value. With the proposed changes, only $4,500 would be allowed. This means buyers will need to have more cash at the closing to pay for closing costs.

Upfront Mortgage Insurance Payments- Currently, the FHA tacks on 1.75% on top of the borrowed amount to fund the reserves to pay out when loans go bad. The new amount proposed is 2.25%.

What does all that mean to you? If you are not a candidate for conventional borrowing ( credit scores typically in the upper 700's, 5-10% down) then FHA is the way to go . With these changes, it will be more costly to use this program but considering the low interest rates, lower sales prices in the market these days and the governmental credits, its still the way to get the "American Dream" of owning your own home.

Again, these are proposed changes are not in effect at this time. Details and information subject to change.

For more information on the FHA program and for information about buying a home,  please call me at 518-366-2856.