The Proposed Changes For FHA Loans in 2010 and the Affects it Will Have on Your Home Purchase

First time home buyers that want to take advantage of the current FHA guidelines need to move quickly. Changes are coming in the early months of 2010.

Changes that are being considered:

Down payment Minimal of 5% (could be higher)

Sellers concession to be no more than 3%, perhaps even lower.

Insurance Premium which is now at 1.75% of loan could go to 3% of the loan. Premium is due at closing.

Annual Premium insurance which is currently at.55% of the loan amount and is part of the FHA monthly mortgage payment could be going up.

Credit scores could be a minimal of a 620 FICO score.

If you're a first time home buyer who is currently looking to purchase, Diaplex now would be the time.

The closing cost and down payment would be what is affected the most. The scenario would look something like this for a home purchased at $300,000 with current FHA standards you would need $10,500 down payment which can be gifted, $5066.00 for the upfront premium insurance. You would be allowed up to 6% in a sellers assist (help with closing), in this case that would be $18,000, this would cover most of the closing cost depending on your state.

With the new proposed guidelines the scenario would look like this $300,000 purchase price would mean 5% down or $15,000 (there isn't talk about changing the gift portion). The upfront insurance premium due at closing would be $8550.00. The seller assist would be around 3% (some would like to see this at 2%) or $9,000.

Closing cost are more than your down payment and insurance, there are title fees, recording fees, attorney fees, upfront real estate taxes and other miscellaneous fees. Depending on the state you reside, 3% could be efficient, however I know in New York, 3% would not cover most closing cost.

It's going to be costly in the future for FHA applicants, credit scores will be have to be higher and out of pocket expenses are going to be higher as well.

If you have been house hunting, and are going to be using FHA financing, this would be the time to move forward with your home purchase. Waiting could potentially mean needing thousands of dollars more in the near future to purchase a home.

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