FHA Tightens Requirements for Home Buyers

CNN reports in “FHA loan requirements will make it harder to get mortgage” that the Federal Housing Administration (FHA) is tightening requirements for home buyers. While I can’t find anything about the changes on the FHA web site at www.hud.gov, the CNN article reports the FHA is taking the following steps:

  • increase the up-front mortgage insurance premium from 1.75% to 2.25%.
  • require home buyers to have a credit score of 580 or higher to qualify for the FHA’s 3.5% down payment program. If you do not qualify for the 3.5% down payment, you will pay at least 10%
  • sellers can provide only 3% of a home’s price to home buyers to help with closing costs instead of 6% as in the past

Perhaps the most practical step the FHA is taking to help fix the mortgage maket is to seek legislative authority to require lenders to assume liability for all the loans they originate and underwrite.