We knew it was too good to last. Over the past year to year and a half homebuyers have been able to take advantage of some incredible financing through FHA with very little down. Now it appears that homebuyers in the future will have to put more cash in a home purchase in some situations as government officials look for ways rein in finances at the Federal Housing Administration.
“We have made the decision to exercise our authority to increase the up-front cash that a borrower has to bring to the table in an FHA-backed loan, to make sure that FHA borrowers have more ‘skin in the game,’” Housing and Urban Development Secretary Shaun Donovan said in prepared testimony to the House Financial Services Committee in Washington today.
“There are several ways to accomplish this, and so we are currently analyzing various options to determine which is the most effective and consistent with our mission,” he said.
“FHA is considering cutting the amount of home seller concessions a buyer can receive by half to 3 percent of the purchase price to combat inflated appraised values. The minimum credit scores required for borrowers may also be raised, and the guarantee fees charged to lenders may increase. We expect to provide detail and public guidance for these changes by the end of January,” Donovan said.
FHA insurers or guarantees one of every five single-family loans.
