The NEW FHA LOAN

On April 18 FHA increased their monthly mortgage insurance, doubling to twice the monthly amount it was a year ago. Why?
FHA previously supported itself, based on the mortgage insurance premiums paid by borrowers. Therefore, the payouts for foreclosed properties have forced FHA to raise the monthly mortgage insurance premium to shore up their coffers.

Many buyers need FHA guidelines to purchase a home.

The following seven reasons are why FHA is still in the lending game:
1. Gifts. The 3.5% down payment and all closing costs can be gifted.
2. Lower credit scores. Some lenders are decreasing the requirement down to 600 (and in some cases 580)
3. Non-occupant co-borrower: Mom and Dad helping a family member by agreeing to be equally responsible for the mortgage. This is a great way to get into a home.
4. Bankruptcy: The wait is only two years after a bankruptcy, but be sure to reestablish good credit.
5. Foreclosure: The wait is 3 years, compared to conventional, which is 4 to 7 years. Plus it is the only program that will allow buyers to re-enter the housing market with limited down.
6. Short Sale: After a short sale with no mortgage lates, and a good reason, FHA may finance the next purchase immediately.
7. Own another home but can't sell or don't want to sell it? FHA will allow a purchase of a primary residence as long as the borrower can qualify for both payments. Conventional loans will allow the same but only with hefty reserves.

The guidelines above are oversimplified, because as you well know in our industry, other conditions will apply. For example, I have never seen a Short Sale close without late payments and those purchasing a house 2-3 years after a foreclosure or bankruptcy had stellar credit prior to the events. All these examples are in an ideal world where your only blip on the credit radar was the short sale, foreclosure or bankruptcy. Even though, FHA is currently the loan of choice for many Buyers.