FHA To Change Guidelines…How Will It Effect Knoxville Home Buyers??
Patti Francisco with Wells Fargo sent along information on this anticipated announcement from HUD today relaying changes to FHA lending terms in it’s continued effort to shore up the program against increasing financial losses and the threat of needing a government bailout.
The changes being announced are expected to be:
- Increase the Mortgage Insurance Premium which is collected at closing and most often financed with the loan from 1.75% to 2.25% of the loan amount.
- Require that any borrower with a credit score less than 580 put down 10%. 3.5% down will continue to be required by HUD with credit scores equal to and greater than 580. ***Note that most lenders apply their own credit policy overlay on top of the HUD credit score requirements, i.e. Wells Fargo currently has a credit score minimum of 600 for our FHA transactions. Most other lenders have a 620 or 640 FHA credit score minimum.
- Seller concessions will be limited to 3% of the purchase price versus the currently 6% limit.
There is currently nothing posted by HUD or FHA to confirm this information that is being released through the media. There is currently no date for implementation and I’ll pass along any new information as I receive it.
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