If you’ve been considering buying a home in San Diego with an FHA loan, there have been some changes in recent months that you should be aware of. While most of the regulations are geared towards lenders, some of it ultimately affects you as the buyer.
- Credit Scores. New FHA borrowers must have a minimum credit score of 580 to qualify for the 3.5% down payment plan. Borrowers who have credit scores less than the 580 minimum will be required to put down at least 10%. Having less than a 580 credit score will not disqualify you from the loan—it just requires less favorable lending guidelines. If you aren’t far from reaching that 580 mark, there are ways to improve your score rather quickly.
- Up Front Mortgage Insurance Premiums. Premiums have gone up to 2.25% for all FHA case numbers assigned after April 5, 2010. This includes the purchase money mortgages, the FHA’s Streamline Refinance program, and full-credit qualifying refinances.
- Seller Concessions. The FHA has lowered seller concessions to 3% (it was previously at 6%). FHA officials say “the move is designed to eliminate the temptation to inflate the appraised value of a home for sale.”
- Increased Transparency in the Loan Process. All FHA lenders are subject to a neighborhood watch program. According to the FHA, this program shows “lender performance rankings to complement currently available Neighborhood Watch data.” The Department of Housing and Urban Development has made information available on their website that allows the public to view a lender’s loans. The data shows how many loans are delinquent, if there are any serious delinquencies, and lending insight into that particular lender’s financial well-being. Additionally, the program acts as a part of a larger FHA initiative to better monitor and increase enforcement of FHA lenders to make sure that all loans are in accordance with FHA loan requirements and regulations. An FHA press release proposed Amendment of the National Housing Act that requires “all approved mortgages to assume liability for all loans that they originate and underwrite.”