FHA is proposing new changes to home mortgages - borrowers be ready

FHA is proposing new changes to home mortgages - borrowers be ready. The Federal Housing Administration recently announced that they will be making some major changes to their loan requirements starting April 5, 2010.

Here is a list of the basic FHA home mortgage loan requirements:

• Two Years of consistent employment, preferably with same employer.

• Last two years Income should be the same or increasing.

• Credit report should typically have less than two thirty day lates in last two years with a minimum credit score of 620 or higher or in some cases no credit score at all.

• Bankruptcies must be at least two years old, with perfect credit since discharge.

• Foreclosures must be at least three years old, with perfect credit since discharged.

• Your new mortgage payment should be approximately 30% of your gross income (before taxes).

If you would like to know what your payments would be on a FHA loan, use this helpful FHA Mortgage Calculator

The New FHA proposal changes are:

Increase in the upfront mortgage insurance premium (UFMIP). Currently its at 1.75%, but with the new proposal it would be 2.25%. On a $200,000 mortgage it would be $4,500 compared to $3,500.

Seller concessions would be decreased from 6% to 3%. Meaning, more money a borrower needs to come to closing with (down payment + closing costs) to cover all necessary charges and fees. Before, it was just the down payment that the buyers needed to cover.

Credit score requirements are currently being increased. FHA borrowers with a FICO score of 580 or less would need to put 10% down.

The down payment minimum of 3.5% is in the works of being increased to 5% which is pending on Congress approval.

For more information on the depth FHA rules and regulations go to this wedsite.