Over the past few weeks we’re received a lot of questions regarding the recent changes to the FHA loan program. I might as well address some of these questions and concerns publicly. The changes are due to the recently signed Housing and Economic Recovery Act of 2008.

Changes to the down payment requirement: The minimum down payment requirement will increase from 3% to 3.5% starting October 1, 2008. To take advantage of the 3% down payment contracts must be dated before September 15th, underwriting approvals must be made before the 22nd and loans must fund by the 30th. Now, not only is the down payment requirements increasing, but H.R.3221 eliminates down payment assistance programs all together. I personally, don’t understand the reasoning behind this but then again it’s the government.

Status of the Upfront Mortgage Insurance Premium: HUD had recently made the FHA Upfront mortgage insurance risk-based. Meaning you paid more if you had worse credit. Now with the new bill H.R. 3221, there is a one year moratorium on these changes. In the mean time FHA will revert back to the single 1.5% premium charge.

New FHA loan limits: The new FHA loan limit will be the lesser of 115% of median sales price for your area or $625,500 but no lower than $271,050.  The median sales price this will be based on will not be published by HUD until November. We do know that if your loan limit since March has been higher than $271,050, the only way your loan limit will not be lower starting January 1 is if your area home prices have been having a significant rise (not true of hardly any area).  However, we don’t know what the new loan limit will be for sure until FHA does their math, only that it will be somewhere between the floor of $271,050 and the cap of $625,500.

Bottom line is that if you are planning a home purchase and would need a FHA loan, then you need to be aware that the loan limits will most likely be falling and the down payment amount will be rising after the first of the year. In essence, might as well purchase before end of the year.

$7500 tax credit: The recently signed bill provides a $7,500 tax credit for first-time homebuyers that will expire July 1, 2009, must be repaid over 15 years — making it, in effect, an interest free loan. First-time home buyers are defined as those who have not had an ownership interest in a real estate property in the past three years. North Phoenix Agent, Heather Barr, has a great post on her blog with details on this tax credit.

As you can see there are lots of changes in the industry. If you are in the market for a FHA loan, my best advice is ask lots of questions.

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Tags: down payment, fha changes, HUD, loan limits
Categories: Congress and Government, FHA, Mortgage Insurance, Mortgages, Uncategorized, down payment assistance
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Hat tip: Arizona Mortgage Team

Tags: Down Payment Assistance, FHA, HUD
Categories: Congress and Government, FHA, Mortgages, down payment assistance
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At 11:04AM today we received an e-mail stating that about $3.5 Million was now available for the non-target areas of the Home in Five Program. Money previously assigned to targeted areas were now released as non-target, meaning you didn’t have to be a first time home buyer to use these funds anywhere in Maricopa county. This is obviously very good news since we are working with a few buyers who could use these funds.

A little after 5pm we received a call stating that one of these buyers had an accepted contract. Aimee quickly jumped on the Home in Five website (lenders only) to reserve funds. She was stunned! There was only $229,000 left at about 5:25PM. This is a depletion rate of about $585,000 per hour! Wow.

Moral of the story is that these funds go fast. With 100% loans scarce everyone is looking for down payment assistance. There are still programs like the Home in Five out there which are available to needy borrowers, it’s just that there are lots of restrictions attached to them and oftentimes its only available on a first come first served basis.

Fortunately our borrowers loan size was smaller than fit under the available funds, so we were able to reserve the money for their purchase.

Read more on the Home in Five Down Payment Assistance Program.

Tags: Down Payment Assistance, home in five, maricopa county
Categories: Arizona, Mortgages, down payment assistance
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I receive a lot of questions on the Home in Five Down Payment Assistance Program. The most popular question is of course regarding the availability of funds for non-targeted areas. Well, if you were waiting for these funds before making your purchase then wait no more. We have some good news today. I received an e-mail this morning that there has been $2,000,000 released for down payment assistance in non-targeted areas.

What does this mean to you then?

This means that money is now available for down payment assistance on properties that are outside the designated targeted zones but inside Maricopa county. Just so everyone is clear here are some quick facts:

• Borrower must be fully approved for a loan program which allows the use of down payment assistance (such as FHA)
• Borrower can use funds to purchase anywhere in Maricopa county.
• The borrower does not need to be a first time home buyer (for these funds).
• Have a property in escrow, appraised and underwritten - since the money runs out quick.
• The rate on this program is 6.3% and the assistance is 5% of the purchase price.
• Funds are disbursed on a first come first serve basis.

This program allows up to 5% down payment assistance.  Funds can be used to pay closing costs as well, it just depends on how you end up structuring the loan with your loan officer.

Just a reminder that these funds are HUGELY popular and go fast, so if you are anywhere close to finding a property…this is a SUPERB time to take the plunge!

Read more on the Home in Five Down Payment Assistance Program.

Tags: Down Payment Assistance, maricopa county
Categories: FHA, Mortgages, Uncategorized, down payment assistance
5 Comments »