HUD Secretary Donovan and FHA Commissioner testified that they expect FHA to announce major changes to esure FHA’s long-term financial soundness.  Some examples are as follows:

1)      Increase the down payment required from 3.5% to 5%

2)      Raise the upfront premium from 1.75% to as much as 3%

3)      Eliminate the ability to roll in to loan that up front premium

4)      Increase monthly MIP from .55%

5)      Reduce seller concessions from 6% to 3%

6)      Raise minimum FICO score

7)      Possible LTV maximums by FICO score

8)      Increase accountability of FHA Lenders for fraud

Timing:  “We expect these changes to be announced soon and could be implemented within a couple months.  None of these changes requires congressional approval and can be made administratively and therefore can be implemented quickly.”

This is of course going to make it tougher and more expensive for borrowers to obtain FHA loans and therefore reduce the number of eligible borrowers. Another reason to get out and start looking for your next home NOW!! And those considering selling, DON’T WAIT for spring…get your home on the market now, before these changes go into effect!!