So i’m not a huge fan of April Fool’s…so this is not a joke!
The FHA is increasing the upfront mortgage insurance premium from 1.75% to 2.25% of the loan amount for all loans that are not assigned a case number by Sunday night. A case number is assigned to a person AND a specific property, which means getting under contract THIS WEEKEND. The banks are closed tomorrow for Good Friday, and the revision actually takes place as of April 5th, so today is the last REAL day to save yourself some $ and get your loan application in!
Here’s an example:
Sales price of $450,000 with 3.5% down-payment (current FHA minimum)
Down Payment = $15,750
Loan Amount = $434,250
Upfront MIP today at 1.75% = $7,599.38
Upfront MIP after Sunday at 2.25% = $9,770.63
Total Increased Cost To You = $2,171.25
What’s next for the FHA?
Speculations say we’ll see increased down-payment requirements. Currently, 3.5% of the sales price is the minimum down payment for an FHA loan, however, we don’t expect this to stay this low for much longer. They also plan to reduce the maximum amount contributed by the seller from 6% to 3%, and currently, the buyer must have a minimum of 3.5% into the transaction (that would be paying $0 for closing costs).
They’ve also changed the FICO requirement to 580; anyone with a FICO score below that will have to make a minimum down-payment of 10% (not 3.5%).