New Lending Policies Announced by FHA

	If you've been listening to the housing news, you've probably heard about some lending changes that were announced by the Federal Housing Administration (FHA). While many of the news reports were confusing, the truth is pretty clear...and isn't as bad as some people may have heard. Overall the measures announced by the FHA are intended to help the organization better manage its risks and strengthen its capital reserves, while still providing home loans to the nation. The good news, as FHA Commissioner David Stevens stated recently, is that "by continuing to provide affordable, responsible mortgage products, FHA will support the housing market's recovery" and "remain the largest source of home purchase financing for underserved communities." What's Changing? If you or someone you know is considering an FHA loan, some of these changes may affect you. Here's a clear, concise rundown of the major changes and what they mean: 1. Increased mortgage insurance. The mortgage insurance premium (referred to as private mortgage insurance by many people) will be increased from 1.75% to 2.25%. This change will add some cost to purchasing a home, but will not overburden consumers since the mortgage insurance is paid over the life of the loan, rather than upfront at closing. This change will become effective on April 5, 2010. 2. New down payment and credit score requirements. According to the new policy, homebuyers who have a credit score of at least 580 may still be able to purchase a home with 3.5% down, but those with credit scores of less than 580 will be required to put down at least 10%. This change is designed to help the FHA balance its risk, while still providing affordable down payments for consumers with a history of good credit and responsibility. 3. Reduced seller concession. Basically, this change means that the person selling the home will now only be able to offer the homebuyer 3% to help defray closing costs, as opposed to 6% under the previous policy. In addition to these changes, the new policies contain a series of new measures aimed at increasing lender enforcement. The bottom line is that the changes will impact some homebuyers more than others. But in the end, the FHA is still committed to providing affordable home loans. If you're concerned about your credit score or are worried about what these changes may mean to your specific situation, please call or email to schedule an appointment. There are many different programs available for homebuyers, so finding the right plan for you just requires a short discussion about your goals and financial picture.

Lender Guidelines as of Sept. 2008 by Alfredo Ramirez of The Loan Source

Alfredo Ramirez, a fantastic lender and one of dsoldit.com's recommended professionals has outlined some excellent "guidelines"....not to be mistaken with specific rules.... for qualifying for loans up to $1MM as of September 2008. Loans change constantly, and guidelines are currently changing approximately every month. For specifics in your situation, call Alfredo directly at (650) 722-1094.

Up to $417,000 Loan
Full Documentation and some stated loans available
Debt to income ratios of over 50%
Down payments of 5% for conventional loans and 3% for FHA loans
Reserves of 2 months PITI (Principle, Interest, Taxes & Insurance)
620 minimum FICO

Loan amount from $417,001 to $729,750
Full Documentation
Debt to income maxed out at 45%
Minimum down payment of 10% (will need mortgage insurance)
Reserves of 2 months PITI (Principle, Interest, Taxes & Insurance)
660 minimum FICO

Loan amount from $729,751 to $1,000,000
Full Documentation
Debt to income maxed out at 45%
20% down payment required (No FHA available)
Reserve requirement of 3-12 months PITI (Principle, Interest, Taxes & Insurance)
680 minimum FICO