FHA Home Loans Refinancing

2012 FHA Loan Requirements


Getting approved for a FHA loan in 2012 may be difficult for some borrowers as HUD has made it clear with FHA guidelines. It is unlikely that 2012 FHA loan requirements will loosen up much, because the Federal Housing Administration is focused on increasing FHA reserves and decreasing FHA loan defaults. Many FHA lenders are concerned that tightening FHA requirements even more in the coming year could significantly hinder originations and the housing recovery as a whole.

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It’s no secret that many FHA companies in California, New York and Virginia are fearful that the reduced government loan limits will hinder the housing market rebound. There are so many borrowers on the loan limit bubble that lowering the 2012 FHA limits will have a negative impact.  HUD may accomplish their goal in decreasing defaults but you can expect a drop in origination in all of the high costs states like California, Connecticut, Colorado, Florida, Maryland, Massachusetts, New Jersey, New York and Virginia.

According to Shawn Downs, a FHA lender in Colorado, “First time home buyers have counted on FHA mortgages for decades, but as FHA requirements get more difficult, we are seeing less applicants qualify for this essential government home financing program.” Downs said, he noticed a decrease in eligibility for consumers seeking FHA financing.

What to Expect for 2012 FHA Requirements

  • Purchase home mortgages will continue to rise because FHA rates remain at record levels.
  • Refinancing with FHA loan originations will fall because property values remain sluggish across the country.
  • HUD will loosen FHA guidelines for appraisals as they realize 2 appraisals is too costly going forward
  • FHA will continue to require full income documentation. Don’t expect stated income loans anytime soon.
  • Fixed loan terms will be offers with 30 and 15-year mortgage rates.
  • Congress will pass a bill repealing the Dodd-Frank Mortgage Act but don’t expect Obama to sign the bill into order.
  • FHA loan rates will rise but remain affordable throughout 2012 and 2013.
  • HUD will stop raising FHA insurance premiums.
  • Applications for FHA loans will rise dramatically as traditional lending parameters remain difficult.

Off the record many mortgage executives are saying they believe it will get worse before it gets better. Look for FHA loan programs to shift their focus back to first time home buying in 2012, but don’t bet on it. Check with our lenders today for the latest updates on 2012 FHA loan requirements.


2 comments so far

What is a LOX? What is proof of EMD per the purchase contract?

2012 new guidelines will destroy any recovery. Hopefully HUD will stop hiking insurance premiums that are eroding and saving that borrowers would get from refinancing.
- Mike P.


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