So, I'm going to try and break this down into bite-sized tidbits as it affects our business daily.
The first BIG issue to prepare for is the increase of the minimum FHA down payment. As of October 1, 2008 the required down payment will go to 3.5%. (Previously the minimum investment was 3 per cent; 2.25% could be down payment and .75% in closing costs.)
This ties in directly with another big change regarding down payments: DOWN PAYMENT ASSISTANCE PROGRAMS. As of October 1, 2008 any seller assisted DPA program is no longer acceptable. The specific dates as it relates to DPA programs:
- Loan must be final approved (including the FHA case number assignment) by September 30th.
- The loan must CLOSE by October 31st.
(For more information on the actions taken since October 2007 with DPA, check out: http://activerain.com/blogsview/255218/Down-Payment-Assistant-Programs.)
This is not to be confused with most bond programs. In Colorado we are particulary fond of the CHFA's MRB First Step w/a CHFA 2nd program (http://www.chfainfo.com/). Even though the FHA down payment will be increased from a total of 3% to 3.5% of sales price, this CHFA program will stay at 3% (off total loan amount) at this time. HOWEVER, keep in mind that CHFA requires a minimum of $1,000 of the borrowers' own funds be invested in the property, it may not be a big change anyway (depending on whether the seller has agreed to pay all other closing costs and prepaids).
Stay tuned for more to come on HERA and the effect on our business day to day...