Lots of recent news regarding FHA financing. In a word it’s going to be tougher to obtain. Due to rising FHA loan defaults, FHA cash reserves will fall below mandated levels by the end of the month. So changes are afoot.
According to a recent CNBC story, FHA Cash Reserves to Fall Below Required Levels, borrowers will be required to have higher credit scores. One lender I spoke to said that 620 will probably no longer cut it. Expect a minimum of 660 or higher.
See also Friday’s WSJ story, FHA Will Tighten Credit Standards. According to the story: "The FHA has taken a much bigger role in the mortgage market during the past two years, as investors have shied away from home loans that lack government backing. In this year’s first half, about 19% of new home mortgages were insured by the FHA, up from about 2% in 2006, according to the trade publication Inside Mortgage Finance."