With 2009 fast approaching, so are some key and important changes in regards to FHA loans. One important thing to remember is that FHA has made these changes official in their mortgagee letters, but that doesn't mean that investors or mortgage companies have to follow them. I will explain later....
What are the new changes?
- Down Payment : The new down payment for FHA loans will be 3.5% down and not 2.25% down. Now, this is a tad confusing, because prior to next year, 2009, it was that the borrower needed 3% of their own monies. In which part of that went to their down payment. And not all the states were the same with the current down payment, but it was the same in each and every state that the borrower needed 3% of their own monies.
The new change? It will be 3.5% across the board, no matter what state. That is the good news, that it will be uniformed. The negative is that the 3.5% will be for the down payment only. Which means that it won't include closing costs within the percentage. Even though the borrower can get up to 6% seller help, this might mean a little more money from the borrower no matter how you look at it. And you might not think it is much, but it can add up. Just on a $250,000 mortgage, that is another $1,250 in total monies needed.
I wrote about this change in more detail when it was first announced. New FHA loans down payment changes for 2009
- Maximum mortgage limits : In many counties, the New FHA loan limits will be decreasing, not increasing. This has been official, but doesn't go into effect until January 1st, 2009. I do have a list of the new changes for each county, so please don't hesitate to ask me about these changes.
Here is my issue in regards to what I mentioned above, that this is HUD's change, yet investors can make up their own rules and guidelines. I have read many blogs and web sites that state that the loan must close prior to January 1st, and this is not true. Even though we have 3 more days until the new loan amounts change, as long as you have a FHA case number prior to 1/1/09, you can still use the old FHA loan amount limit and it can close in 2009. I wrote about it here. New FHA loan limits - Fact or Fiction
Conclusion : With the ever changing mortgage guidelines, you need to make sure that you align yourself with a loan officer that is on top of these changes. But also someone that will educate you on the process and not just tell you what you want to hear. Here is a good post in regards to the mortgage process : Understanding the mortgage process
- FHA Loans - USDA Loans - Conventional Loans - VA Loans - Experience & Knowledge at its BEST !!!
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For more information on FHA loans, please go to this link. : The FHA Expert
For more information on how you can obtain your dream home, please click here : Mortgage Financing Options
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags
Copyright © 2008 by Jeff Belonger
I see FHA as the numebr 1 loan product for 2009.
can you spend a moment on the loan maiximums to help the AR folks? Are the max limits different in parts of the country?
MICHAEL..... yes, they will be different in many counties. As I mentioned, if you e-mail me what counties you would like to know about, I can give you the new maximum loan limits. thanks jbelonger@ihmci.com
Do you think the activity in regards to FHA loans will increase in the months to come?
Jarrad Stephens
(Appraiser Ca)
Jeff, Thanks for the update. FHA loans are on the rise here and it's good to know this information at the start of the new year.
Thanks for keeping me informed - I should reblog this - FHA and USDA are going good here. Well, still slow, but good.
Good stuff Dr. Belonger......great stuff....once again...the 101 on FHA in 09. Currentlhy watching "Wayne's World"....schwiiiiiiiiiiiiiiiinnnnnnnnnnnng! Schwing to your post bro!
Jeff, This is a wonderful idea to post this information ahead of time; it may help some people who are trying to decide whether or not to buy now.
Jef - good information once again. I think the 3.5% amount can be pretty significant, especially for folks who are in pricier areas and don't have a lot of cash. Not too much time to take advantage of the current rates, though.
Have a Happy New Year's.
Jeff
Thanks for the post. Good heads up. In the Stockton area, the houses are so low right now - the limit will not be an issues, but the other points of FHA might be. Its good to keep the buyers and agents updated like this, thanks again.
Jeff thanks for the update. I work with a lot of folks that qualify for FHA. It has been hard to keep up with all these changes in recent months. Seems to change frequently.
I have a client who wanted to close by end of this year because of this change and found out through a knowledgeable lender like yourself that as long as the client had an FHA case number in 2008, he could close in 2009 under the old guidelines.
This change is going to make it harder for some first time homebuyers who don't have a lot of cash on hand and want to take advantage of the low interest and other programs.
Hi Jeff - FHA is a great program. The small change in down payment requirement is no biggie when you look at the big picture. FHA and USDA will be the loan choice for a large percentage of home buyers in 09.
It is a shame the min. downpayment is going up...that hurts some of my buyers and one is considering not buying because he just doesnt think he can handle the extra mortgage costs and have enough money in reserve...probably smart if he doesn't feel ready but with the tax credit its a shame he will miss out on this buying opportunity timeframe.
Hi Jeff - this is a great reminder about the benefits of FHA as well as a good update on the new changes coming into play. I did a number of FHA loans this year, and appreciated how much you kept us updated during the year. That helped me to share that info with buyers here in my area that I worked with.
Our loan limits here in my areas had gone up quite a bit, and I suspect they will be going down some as well. I'll have to look them up to see what those changes in limits will mean for my areas.
Thanks for the updates,
Ann
jeff, someone mentioned 100% fha loans? i know you can combine a 1st and 2nd to go to 100% but what about one loan?
Jeff- thank goodness we have you loan people! I would never be able to keep up with all this stuff! I jsut punt it to the experts!
Thanks for the timely reminder. My last three transactions have been FHA (2) and VA (1). We didn't see those programs here for many years, but they are definitely making a comeback now.
I think increasing the down on these loans is a good thing. It helps to weed out those who are not responsible enough or serious enough to save the little bit needed to purchase a home.
I hope the days of 0 down in the mortgage industry are over.
Thanks for the update, I thought that the seller could only give 5% but your the man that knows. I also think that FHA is going to be the way to go for 2009. Let's make a great year!!
JARRARD..... . each area is different and local, because of the FHA limits. I think in many areas, FHA mortgages have increased over 50% easily. thanks
BARB..... . yes, on the rise, but they will require more money by next year. Without the seller funded DPA, hopefully that won't hurt as much. thanks
VIRGINIA..... . my pleasure and yes, please don't hesitate to reblog this. Now, you said that they are slow there? Slow in processing? Slow in? thanks
LARRY..... . I loved Wayne's World... I need some humor in my life right now... ;o) In any case, thanks for the kind words.... and let's rock it in 2009.
CAROLE.... . it's information that I put out a few months ago and I should have written about this a few more times.... I just hope it helps some.
JEFF D. .... . thanks... as one person commented, they said it's good that they raised this. I agree about savings, but in today's economy, I would rather see the borrower have more saved after closing than using every dime. It could hurt some... thanks again..
ROSEMARY.... . thank you.... I have heard so much misinformation, that I felt like I needed to bring this up again. And that's good that values are lower than the FHA limits... this should allow for more FHA financing if needed.
NANNETTE..... . it can even be hard for that loan officer or underwriter. Yes, so much to keep track of. And unless you are a B of A or Wells, someone that services their own loans, you need to keep up with each investor also and their changes.
COLLEEN..... . that's good to hear. And I agree also, that this change could hurt some.... but I guess time will tell or people will just need to save nickles and dimes.
BILL.... . I semi agree, depending on who is looking at the big picture. It's tough out there, to save.... if it was such a big deal, then investors wouldn't take part in the USDA loans.... loans fail in many cases now because of the economy. I know too many people that have foreclosed even putting 10% to 20% down... and FHA loans should have been just as good in the last 5 years. They are being used more now because the other easy programs are gone... it's a Sad fact, besides the fact that the loan limits were raised some. just my .02
SONJA.... . I agree .... and I will be writing about the tax credit, because it is still good for homes bought in 2009 up until the summer I think. I forget the exact date...
ANN.... . I will e-mail you soon, what they new loan amounts will be in your state. Overall, I am glad that you were able to share some of my information with your buyers... thanks
KEVIN..... . no, there are no 100% loans. And in regards to combining 2nds.... lenders don't have 2nds on a FHA loan... but you can get township or state programs that attach a lien to the property that acts as a 2nd... and there is not CLTV requirements when doing this... hope that answers that question.
thanks for the reply Jeff. Regarding the tax credit, it is good for homes purchased through 6/30/2009...good stuff!
Jeff,
If I'm following the replies correctly, it appears this blog was targeted for Realtors.
One change you may continually want to remind Realtors of is FHA has really tightened the criteria for recognizing rental income on your current home to be used to qualify for a purchase of another home. I'm sure you've posted about it before.
I keep reminding everyone I work with, but still run into Realtors & their buyers that are unaware of the guideline change. Sad as the change occurred a couple months ago.
It's really a shame HUD changed their guides on this. It's a great time to rent your old home out and take advantage of the market and buy a new home.
Drew Sygit,
CMPS, CRMS, CMLO, CALO, MBA, NAMB/MMBA Instructor
Thanks for the review. I am particularly interested to know the new maximum FHA loan amount in my area.
Great information. Thank you for sharing.
Very informative.
CAROL..... . us loan people? I feel like a trash collector... lol Seriously, my pleasure... I love stats and in this case, educating or updates... Next week, your local weather... lol
SUSAN..... . wondering why you haven't seen them, FHA loans, until recently. In my opinion, there are only 2 reasons.... either the previous loan limits were to low OR many loan officers and or lenders weren't FHA approved... OR, just didn't bother with them, because they were a little more work for themselves... but that would hurt the borrower in many cases then...
MIKE..... . I appreciate your input. But do you seriously think another 1/2 percent out of pocket is going to make you more responsible? In my opinion, many of these foreclosures were due to poor education (slamming borrowers into loans that they didn't belong in... or bait and switching the rate and or fees at the end).... OR.... just the piss poor economy overall... Again, just my .02.
LYN..... . no, it's still 6% and always has been since I got into the business in 1992. There are a few that sometimes misinform the public... or sometimes the public knows better. But for the most part, yes, for some, it's hard to keep track of everything...
KEVIN..... . your welcome... and yes, to June 30th of 2009. I just had so much going on today.... thanks again...
The Lending Edge..... . no, not really... it was targeted to everyone, including realtors... it just so happens that most that comment are realtors. And this is even for those loan officers that aren't up to date on the changes. And yes, there are many...
In regards to talking about the new changes for rental income, I have written about it. But I didn't want this post to be long and boring. Besides, even though I have had some rent out their properties this year when buying, most people don't have the money to buy unless they sell. Now, I did do two in Florida that rented, and one was able to use the seller funded DPA.
KELSEY..... . my pleasure..... here are your limits for Tennessee. If the county is not listed, that means it meets the floor limit. There are no ceiling limits in TN.
KIM.... . my pleasure and thanks for stopping by...
MIKE... thanks.... good luck in 2009
Jeff, thanks so much for sharing this useful information. I hadn't heard about either of these changes! I'm reblogging this post to keep my clients up-to-date. Happy New Year!