FHA Changes

Current FHA Changes:
1) On FHA Case numbers assigned on or after April 5, 2010, up-front mortgage insurance
premium (MIP) will increase to 2.25%. (previously 1.75%)

2) As of February 1, 2010, FHA has eased up on its 90-day "flipping rule" with regard
to re-sale of properties that are not bank-owned/foreclosures. The waiver exists if :
a) It is an arms-length transaction and
b) If the sales price of the property is 20% more than the Seller's acquisition cost,
the value is justified by supporting documentation and/or a second appraisal which
verifies that renovation, repair, and rehabilitation work substantiates the increase in value.

Changes on the way:
3) Reduce allowable seller concessions from 6% to 3% The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions. This change was posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.

4) Update the combination of FICO scores and down payments for new borrowers.
New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA's 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
This change was posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.