The FHA loan program is widely used in the DC area. Last year, half of my buyers used this type of financing. With this in mind, I've summarized a few of the upcoming changes in the FHA loan program that will impact buyers.
This month, FHA spot approvals disappear. In April, a few additional changes will take effect. If your credit score is less than 580, you'll have to put 10% down if you use an FHA loan. Currently, the down payment for an FHA loan is 3.5% regardless of your credit score. The up front mortgage insurance payment is changing from 1.75% to 2.25%. That's a big difference! Monthly mortgage insurance payments will remain at .55%. Also check out Kenneth Harney's feature "To Boost Sales of Foreclosures, FHA Suspends Anti-Flip Rules" in the The Washington Post.
Lending is becoming more and more difficult. If you're thinking about purchasing this year and utilizing the tax credit, talk to your lender FIRST. This is the most critical part of the process.
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