The Federal Housing Administration (FHA) has announced new regulations which go into effect on April 1, 2013. These regulations were developed to provide additional revenues for the insurance fund (making more moneys available for any future housing" bubble") and to add additional underwriting standards for specific insured loans (see below).
- Insurance premium up by 10 basis points or 0.1% for loans up to $650,000.
- Insurance premium up by 5 basis points or 0.05% for loans above $650,000.
- Premiums now stay in place for entire life of the loan.
- Loans of buyers with FICO scores less than 620 and a total debt to income ratio greater than43% must be processed manually: not eligible for FHA’s automated program, TOTAL Scorecard.
- Will propose a minimum down payment of 5% for loans between $650,000 and $729,000.
With these changes, the Agency will be in a more secure position to provide the insurance required under its operating statutes.