More and more people are becoming familiar with FHA loan programs and liklihood of 2011 FHA guidelines being revised are good. Millions of new homebuyers have been making efforts to get approved for FHA home loans before HUD implements new FHA guidelines. HUD is tightening credit guidelines and FHA loan requirements for home purchase and FHA refinance transactions. According to the Mortgage News Post, The Housing of Urban Development is going to be asking more from borrowers with minimum credit score and in some cases higher down-payments, especially for loan applicants with challenged credit.
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New FHA Guidelines
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The Mortgage Bankers Association hinted in their recent report that the new FHA guidelines may have indirectly helped increase the demand for purchase mortgages last week to their highest level since April 1st, 2010. Applications for FHA mortgage loans jumped a seasonally adjusted 9.3% during the week ending October 1st. Most industry insiders agree with MBA that the 17.2% spike was due in large to the demand for FHA home loans. In July, HUD announced that FHA borrower’s assigned case numbers after October 4th will need a 580 FICO score in order to purchase a home with the minimum 3.5% down-payment.
Borrowers with credit scores between 500-579 must make down-payments of at least 10% to qualify for the FHA mortgage insurance program, and those with scores below 500 won’t qualify for the program at all, HUD said in a September 3rd letter to FHA lenders.
It was the second straight weekly increase in purchase applications, pushing demand to levels not seen since the first week in May. However, home loan demand was still off nearly 35% from this time last year. The home mortgage refinancing demand was down 2.5%, with applications for refinances accounting for 78.9 % of total applications, down from 80.7% the previous week.
The average FHA rates for 30-year fixed-rate home loans decreased to 4.25% from 4.38%, with points dropping to 1.00 from 1.01 for 80% loan-to-value (LTV) ratio mortgages. The 30-year mortgage is the lowest recorded rate in the survey, with the previous low being the rate observed last week.
The average FHA rate for 15-year fixed-rate mortgages decreased to 3.73% from 3.77%, with points rising to 1.14 from 1.13 for 80% LTV mortgages. The 15-year FHA rate is the lowest recorded in the survey, while the previous low was observed last week.
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