It looks like FHA is planning to beef up its falling reserves by requiring borrowers to come up with a bigger down payment. Can you see your home ownership dream fading away? Well, don’t let it! Yes, FHA is likely to require 5% down instead of 3.5% in the near future. HUD Secretary Shaun Donovon says that’s a virtual certainty. But what about deserving sorts who really need some help? What if you know you could pay your mortgage but could never save a down payment while paying rent and other obligations? Is there hope for you? Continue reading ‘FHA Mortgages: Is My Down Payment Going to Increase?’
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Some of you lucky folks have people wanting to give you money to help you out with your down payment. But how does the lender feel about that? It depends. Continue reading ‘Funding Your Down Payment with a Gift’
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Countless renters became successful homeowners in the past because of two programs: FHA mortgages and down payment assistance like the Nehemiah program. The US Department of Housing and Urban Development (HUD) allowed FHA loans to be made with very small down payments (2-3%), charging borrowers insurance to cover their default risk. The program remained solvent for decades and has largely been considered a resounding success. Borrowers who couldn’t save even the tiny FHA minimum down payment could sometimes receive help through down payment assistance or community homebuyer programs, allowing them to buy a home with no down payment. And many more families became homeowners through these programs.Unfortunately, recent trends are showing that down payment assistance can have unintended results. For example, HUD discovered in a recent study that borrowers with no money of their own invested in a property are many times more likely to walk away from their homes and their mortgages than others with similar financial situations. And for the first time in its history, FHA’s insurance premiums collected from borrowers will not be enough to cover its losses from mortgage defaults–meaning perhaps a taxpayer bailout is in the future.
HUD would like to change its guidelines to prohibit down payment assistance and not allow FHA mortgages in which the buyer has not made a down payment using his / her own funds. So what does that mean to those considering a home purchase today? Urgency. If you are considering a home purchase and think you might qualify for down payment assistance you may have very little time to close that deal. So STOP reading this blog and START your online search for a lender NOW. You can thank me later when you have time.
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