Say it ain't so. First, we all said goodbye to the zero percent down payments. Now we might have to say goodbye to 3.5% down payments. Right now FHA allows a home buyer to put 3.5% down and they allow a seller contribution to help buyers with closing costs. If changes currently being discussed are passed then start saving your pennies because the FHA is going to require a 5% down payment. To add more strain to those home buyers just struggling to get into a home, the FHA is talking about limiting the seller allowable contribution toward closing costs to drop from 6% down to 3%.
Here's how it looks in color:
To buy a home that costs $100,000 your minimum down payment will increase by $1,500 and the seller allowed contribution toward closing costs drops by $3,000. Buying a home that costs $200,000 you'll need an extra $3,000 for your down payment and the seller will only be allowed to contribute $6,000 toward your closing costs not $12,000. Luckily, most buyers don't have loans with $12,000 in closing costs.
Here's more detail:
Daily Real Estate News | December 3, 2009 |
Share
HUD Considers Tightening FHA Requirements
U.S. Housing and Urban Development Secretary Shaun Donovan on Wednesday asked Congress for authority to raise borrower premiums and down payments in order to bring the Federal Housing Administration’s reserves above the mandated 2 percent minimum.
The agency plans to reduce the maximum permissible seller concessions from 6 percent to 3 percent. The minimum borrower FICO score will be raised above the current 500, although the final number has not yet been determined. It also will likely increase the down payment to 5 percent, but that number hasn’t been decided either.
Donovan also wants lenders to take responsibility for losses associated with loans not underwritten to FHA standards and to be accountable for origination quality and compliance.
Critics said tightening up FHA could slow the housing recovery.
"What would cripple the housing market is the FHA changes its down payment requirement," said Rodney Anderson, a broker with Supreme Lending in Plano, Texas, the top individual originator of FHA loans in the country.
Source: Reuters News, Lucia Mutikani (12/02/2009)
Its one more reason for home buyers to get off the fence and buy now rather than wait. The 3.5% down payment is still in effect but its hard to say when the change will be made. Rates are still historically low; home prices are more affordable than they have been in years, and the government just extended the home buyer tax credit. How many more reasons do you need to buy a home? Just be prepared to say goodbye to the 3.5% down payment if you don't act soon.
Very interesting article. I definitely agree that now is the time for home buying. Other than the obvious implications that housing prices will rise with the economic recovery, this 3.5% downpayment is another great reason why buyers should take advantage of this opportunity.
Posted by: newhomelistings | December 08, 2009 at 05:14 PM