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FHA Changes In The New Year

LogoSome interesting news from the FHA this week. With the increased popularity of FHA in the absence of other alternative products (they now insure 30% of all new loans) FHA is nearing the limits of loans they can make based on their capital ratio. To address this problem FHA will be raising their upfront mortgage insurance premium fees from 1.75% to 2.25%. They have also requested approval to increase their monthly fees.

On a positive note they have lifted their 90 day seasoning rule for sellers. This takes effect Feb 1st for a period of one year. All transactions must be arms-length. If the sales price is 20% or more than the acquisition cost, the lender will require a second appraisal.

Some more good news, which we feel is very important to note and directly impacts our clients, is the FHA has reduced the pre sale requirement for new condo developments to 30%. With developers struggling to move their new projects, this news will provide a big boost.

For questions or more information please call our mortgage specialist Jesse Kenner at 401-644-4066. He can also help you get your new development or condo conversion FHA approved.

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