Before things really hit the fan with the housing market there were many proposed changes to FHA. When the sub-prime crisis went into full swing things got quite rushed and now it seems that FHA requirements and limits are different every week. On the Seattle Real Estate blog, Rain City Guide, Rhonda Porter offers a great rundown of all the current changes to FHA and things that will be changing in 2009.

One change that I’d like to touch on: Down Payment

Here’s Rhonda’s description of requirements that are effective January 1, 2009:

Minimum down payment increases to 3.5%. Home Buyers have until the end of the year to purchase under the 3% down payment requirement. Sellers can pay actual closing costs once the buyer meets the minimum down payment requirement (which can be gifted or loaned by a family member).

Some of you may recall that when FHA Modernization was in the planning stages some legislators were pushing for as low as zero down and for a time it seemed that it’d be under 1.5%.

Why the change to 3.5%?

The answer is simple: Legislators realized that dropping the down payment amount could turn FHA into the new sub-prime. Although this change will make it harder for some to be eligible for FHA Loans, it is also insuring that FHA Loans are being given to those who can afford to be home owners.

This entry was posted on Sunday, November 2nd, 2008 at 6:55 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.