FHA unveiled 3 policy changes today that they believe will boost their capital reserves. The first two changes of the recent FHA press release are of the most importance to anyone considering buying a home in Northern Virginia in the future.
-Update the combination of credit and down payment requirements for new borrowers. New borrowers seeking FHA-insured financing will be required to have a minimum FICO score of 580 to qualify for FHA’s flagship 3.5 percent down payment program. New borrowers with credit scores of less than a 580 will be required to make a cash investment of at least 10 percent. Borrowers with credit scores of less than 500 will no longer qualify for an FHA-insured mortgage.
-Reduce allowable seller concessions from six to three percent. Allowing sellers to contribute up to six percent of the home’s sales price to offset a buyer’s costs exposes the FHA to excess risk by potentially driving up the cost of the home beyond its appraised value. Reducing seller concessions to three percent will bring FHA into conformity with industry standards.
Read the full press release from HUD with information about all three proposed Changes to FHA Lending Policies.
If you are considering buying a home in the Northern Virginia area later this year these changes could impact your plans. You have the next 30 days to make comments about how these changes. Speak up now!