FHA Changes Rules For Loans

Online, February 22, 2010 (Newswire.com) - With the changing economy there will be new guidelines regarding FHA loans. The FHA's tightened lending requirements will no doubt have an effect on the housing market considering that an estimated 40% of all loans are FHA. One of the biggest changes is the increase in the upfront mortgage insurance premium from 1.75% to 2.25%. This will increase closing costs by ½ a percent. Another significant change will be the minimum down payment. The traditional down payment of 3% has been raised to 3.5% and for those whose credit FICO scores are below 580, the amount will jump to 10% down. One last change will be a reduction in the amount of allowed seller's contributions. While the number was traditionally help at 6%, the new amount will be reduced to 3%. FHA loans have traditionally been used by buyers to be able to purchase homes with as little down as possible and there is no doubt that this will hamper buyer's ability to purchase homes.

While these changes will affect buyer's ability to purchase, the first time buyer tax credit, the historically low interest rates and great selection of homes in the Houston Real Estate Market still make buying a home in Houston a good investment and shows why there is no time better than now to buy. If you are looking to buy a home in the Houston area, please call Paul Silverman at Our First Nest Realty for you real estate needs.