As you may know, FHA has played a major role in the past few years to our recovering Mesa real estate market. Historically, FHA has accounted for just 3-5% of all home loans in our country but currently they account for almost 30% of purchases and 20% of all refinances! Because of this huge swing in market share, HUD Secretary Shaun Donovan has been very busy discussing ways to protect FHA from future potential losses from delinquent mortgages. HUD has began outlining and implementing changes that could impact potential home buyers and first time home buyers – like you – in your ability to get an FHA mortgage to purchase a home in Mesa or anywhere in the Southeast Valley. Below are a few of the changes to pay attention to:
- Reduce the maximum permissible seller contributions towards closing costs and pre-paids from 6% to 3%.
- Raise the minimum FICO score required to obtain an FHA loan; currently this sits at 620. There has been no specific FICO score mentioned at this point, just be aware that it could be raised soon.
- Raise the down payment. Currently the minimum down payment still sits at 3.5% and there has been no mention of a specific down payment in the proposal but it is something FHA is considering.
- Raise MIP – The up-front mortgage insurance premium is currently at 1.75% of the loan amount (in most cases) and they are considering an increase to up to 3.0%. The annual premium (monthly mortgage insurance) is also under fire and may be increased as well.
If you have any questions about this, you can always call or e-mail me. You can also visit HUD’s website at HUD.gov for the latest and greatest.
