FHA make Significant Changes
The Federal Housing Administration has made significant changes to their loan program. These changes raise both the Mortgage Insurance Premium amount and the length of time the premium must be paid. Typical borrowers on a $150,000 mortgage will see an additional $12 per month in Mortgage Insurance Premium if originated after April 1st, 2013 and for most borrowers the premium will never go away. For loans greater than 90% LTV (loan to value) the premium will remain in place for the life of the loan whereas under the prior system the premium would go away when the borrower had paid it for 5 years and the LTV reached less than 78%. Borrowers can cut that premium to only 11 years if they put down a minimum of 10%. Credit scoring and debt ratios have also tightened slightly with the requirement of manual underwriting for credit scores less than 620 and debt rations over 43% of total income. My recommendation, provided you can qualify, is to put 5% down (instead of 3.5%) and obtain a conventional loan which has lower premiums and a shorter lifespan of those premiums.