We knew it was coming but unsure of exactly what, FHA has now raised their fees and continues to tighten their lending standards in efforts to shore up debt and prevent taxpayer bailout. We have learned that FHA reserves have fell below minimum federal requirements. Why is this increase so important you might ask. FHA is vital to the housing housing market. Insuring around 30 percent of all new mortgages, it is also the largest backer to first time home buyers. Under the changes home buyers will:
Pay an upfront mortgage insurance premium of 2.25% of the total loan amount, up from the current level of 1.75. So a borrower taking out a $200,000 mortgage will be required to pay $4500 fee instead of $3500.
Buyers will also need a credit score of at least 580 to qualify. But most FHA lenders already require much higher than this.
Will it help, much like the rest of the market only time will tell.
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