FHA Loan Requirements

With the government loan defaults rising, HUD announced many FHA requirements changed for their home financing initiatives nationally. In 2010 FHA loan requirements were tightened on FHA credit, FHA down payments and maximum LTV limits for cash out transactions. With FHA mortgage rates falling to record lows, it is imperative that you understand the new FHA requirements and how they could affect your eligibility.

In late 2009, HUD announced significant changes to their FHA guidelines that would have significant impacts for several FHA loan programs. After being battered by loan defaults in 2008 and 2009, HUD increased the amount of home equity required for cash out loans to 15%. Previously, FHA only required borrowers to have 5% equity in their home. The maximum loan to value allowed on cash out loans is 85%. In this volatile market, FHA loan requirements have been changing frequently so check with a loan consultant from time to time if you are shopping for mortgages online. Find out if you are eligible for FHA financing, because FHA mortgage rates are more affordable than ever.

Updated FHA Loan Guidelines for Home Buying or Refinancing

FHA credit score minimums have been implemented by many FHA lenders, so check with your loan officer about your qualifications and eligibility for FHA loan programs.  The other significant change that HUD made was raising the down-payment requirements from 3% to 3.5%. Check out this FHA article: Tighter FHA Loan Requirements for Lenders and Borrowers.