FHA lending to tighten soon!

In reading a recent article in Realtor magazine I was reminded of the impending changes the FHA is going to have to implement in it's lending practices.

'No one likes it when changes to mortgage underwriting make it harder for working households to secure safe and affordable home financing.

But in the case of the FHA’s tightened lending requirements announced in late January, the end may justify the means. The policy changes are designed to shore up the FHA’s capital reserves and help the agency do a better job of managing risk.

Nonetheless, Buyers will have to either spend more to secure financing or scale down what they buy.
Among other things, the FHA is raising its upfront mortgage insurance premium to 2.25 percent from 1.75 percent, boosting the minimum down payment to 10 percent for borrowers with a credit score of 580 and below (it stays at 3.5 percent for everyone else), and reducing permissible seller concessions from 6 percent to 3 percent.'
'The reduced seller concessions will hurt, too, because these funds typically help buyers take care of closing costs like title insurance and the mortgage origination fee. "With that now limited to 3 percent, buyers might have to come up with another 1 percent of the mortgage amount.
The higher up-front mortgage insurance premium won’t affect the amount of cash buyers will need to raise, as that can be financed. But it will affect how much house they can afford, and could increase their monthly payments by $50 to $100

So, to put it simply; this is going to affect How much a Buyer can afford, and How much the Seller can help out. The sooner a Buyer can get in, get qualified, and buy a Home, the easier and more cost effective it will be.