The Federal Housing Administration (FHA) announced Wednesday that it will be making some major changes to its programs in an effort to shore up its finances. That means buyers who were hoping to get a San Diego Home loan using the FHA program need to take action soon or will have to comply with the new changes. The implementation dates of these changes have not been announced yet.
Increase in Mortgage Insurance
Annual mortgage insurance premiums for San Diego FHA loans will rise by 0.10 percent for most new mortgages to 1.35% and 0.05 percent for loans of $625,500 or more to 1.55%. The San Diego FHA loan limit for 2013 is $697,500.
In addition, buyers who choose to use a San Diego FHA mortgage will be required to continue paying the mortgage insurance premiums, based on the unpaid loan balance, for the life of the loan. The mortgage insurance premiums will no longer be canceled when a homeowner has repaid 22 percent of the loan’s principal.
Increase in Down Payment
The down payment requirements for San Diego FHA loans above $625,500 will increase. Instead of the current 3.5% minimum down payment, borrowers will have now be required to put down 5%.
More Difficult to Qualify
Borrowers with low credit scores and high debt-to-income ratios (DTI) will find it more difficult to qualify for a San Diego FHA mortgage. The FHA will require lenders to manually underwrite loans for borrowers with a credit score below 620 and a DTI greater than 43%. They will also have to “document compensating factors” that support why they decide to make these loans.
This is probably the biggest change and will have the most impact on San Diego Mortgage Brokers being able to get buyers approved.
“These are essential and appropriate measures to manage and protect FHA’s single-family insurance programs,” said FHA Commissioner Carol Galante in a press release.
Other San Diego Home Loan Options Available
As a San Diego Mortgage Broker, I do have access to other programs that now may be a better option for many potential buyers. These include conventional loans with mortgage insurance up to a 97% loan to value or a conventional loan up to 95% which has a higher rate, but no separate mortgage insurance. I will talk about these options in more detail in upcoming posts.
If you would like to get your San Diego FHA loan done before the changes or see what mortgage rate in San Diego you can qualify for, please give me a call at 619-312-0612. You can also fill out a form HERE to get a free rate quote.