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September 29th, 2008

Changes to FHA Policy Set For Oct. 1



As part of the housing rescue bill passed this summer, the Federal Housing Administration is set to institute new regulations come October 1. The FHA will raise their minimum down payment amount to 3.5%, up from 3%. Buyers will no longer be able to seek down-payment assistance from the seller or non-profit organizations.

The FHA is also planning on increasing their fees beginning October 1. Buyers will now have to pay an upfront mortgage insurance premium of 1.75% on their loan amount instead of 1.5%, as well as annual premiums of .55%, up from .50%.

These stricter regulations have been implemented to further prove the strength of the borrower’s ability to repay the loan, reducing the risk of potential default.

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2 Responses to “Changes to FHA Policy Set For Oct. 1”

  1. Rebecca Wilder Says: September 29th, 2008 at 6:41 pm

    I didn’t realize this. This raises the price to buy, thus reducing the incentive to buy. I understand that some regulation needs to be put in place, but right in the middle of the downturn?

    Good post!

  2. Tim Manni Says: September 30th, 2008 at 9:31 am

    Rebecca — Softening the blow felt by one circumstance just might lead to one more negative one. Obviously no one was anticipating this dramatic of a downturn when they constructed the housing rescue bill this summer, but measures needed to be taken to better sort out FHA borrowers. Prices will definitely rise…Will anyone be able to borrow anymore?

    Thanks for commenting,


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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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