Changes to FHA Lending Announced

FHA has recently announced significant changes to FHA loans:

1.  The initial upfront MIP will increase from 1.75% to 2.25%, effective for any FHA case numbers issued starting on April 5, 2010.

2.  The holding period of 90 days for a seller (to an FHA purchaser) has been waived for contracts executed on or after February 1, 2010. This applies to foreclosures and investors (still reviewed on a case-by-case basis).

The following changes will go into effect in the summer of 2010, because they must go through an official approval process, including publication in the Federal Register:

1.  Borrowers will need a minimum credit score of 580 to qualify for the maximum loan percentage with only 3.5% down.

2.   Borrowers with less than a 580 credit score will be limited to a maximum of 90% financing (10% down).

3.   Seller concessions will be limited to 3%.