Tightening up from the HUD on the horizon!

We had a busy week including some important messages from the HUD about “tightening up” that is on the horizon.  Here’s a summary of what we can expect for FHA loans in the very near future:

1. Up Front MIP  will go up to 2.25%, (currently at 1.75%) until HUD is able to get Congress to approve an increase on the Annual MIP which for now is still at .55. This is necessary and will allow FHA to improve its depleted cash reserves. Effective date to be determined, most likely by March 2010

2. Seller contributions will be limited to 3% (a cut from the 6% we now have). Effective date TBD

3. Minimum credit score of 580 for maximum 96.5% financing , (Wells  Fargo and many other lenders have a “self imposed” overlay of 600) Effective NOW