New FHA lending policies

Last year, several of my first time home buyer clients were able to take advantage of attractive FHA-backed loans. In 2010 the FHA is making policy changes, including removing rules against providing FHA backing to loans made to investors who may flip the properties within 90 days. I think this could provide more support and liquidity to the overall market.

Credit score requirements are increasing this year, meaning the low 3.5% down payment FHA loans will no longer be available to those with scores below 580; borrowers with lower scores will have to put 10% down. The percentage of permissible seller paid closing costs will drop from 6% to 3%. And finally, up front mortgage insurance fees are rising from about 1.75% to about 2.25%.