New FHA Mortgage Rules for FHA Home Loans More Opportunities for Homeownership
FHA home mortgages - those insured by the Federal Housing Administration - may soon be a viable financing option for many more prospective borrowers. A current proposal, already passed by the House of Representatives would raise the FHA loan limit to $417,000 in high-cost areas, reduce the minimum required down payment to 1.5% of the home's purchase price. In addition, FHA has agreed to extend the maximum amortization term to from 30-years to 40-years.
The new provisions are part of an FHA reform bill making its way through Congress.
The basic objective of the legislation, according to the bill's text, is "to modernize and update the National Housing Act and enable the Federal Housing Administration to use risk-based pricing to more effectively reach underserved borrowers, and for other purposes." It will give FHA the capability to be more effective in helping past borrowers of high-risk subprime mortgages.
Some borrowers have difficulty making their monthly mortgage payments, thus facing possible foreclosure proceedings, may have the opportunity to refinance into a more conservative FHA loan. An amendment attached to the bill would modify FHA loan limits to permit loans up to the lower of 125% of the local media home price, or 175% of the national conforming loan limit, with additional authority by the Department of Housing and Urban Development to increase limits by area by up to $100,000 if market condition warrant.
Consumers across the country are taking advantage of the FHA rules that make it easier to become a homeowner.
