FHA Imposes Floor for 3.5 Percent Down

FHA Imposes Floor for 3.5 Percent Down

The Federal Housing Administration (FHA) announced major underwriting changes to strengthen its reserves while maintaining the agency's critical position in the mortgage market at a time when its federally backed loans comprise about 40 percent of the market. Among the changes: an increase in the up-front mortgage insurance premium by 50 bps to 2.25 percent; a FICO credit score floor of 580 for borrowers to qualify for the agency's 3.5 percent minimum down payment (other borrowers must put down a 10 percent minimum); and a reduction in seller concessions from 6 percent to 3 percent of the mortgage amount. For further details, access NAR's brief on the FHA changes.