FHA Loans: Bigger Down Payment Required by FHA for Lower FICO Scores (VIDEO)
By: Sheldon Levene
A lot has been made of recent changes to FHA guidelines. FHA announced higher down payment requirements for low FICO scores. This is a move that’s probably long over due. Mathematically it didn’t make sense for FHA to continue to underwrite borrower’s at 580 credit scores with a minimum down payment. At the rate these particular borrowers are foreclosing at it’s just not making profits, period. Since the 70′s FHA has allowed borrowers to purchase a home with little to no money down. Today 1/3 of all home purchases are financed with an FHA backed mortgage. Obviously, this change in guidelines takes some buyers out of the market. These buyers FHA determined posed too much of a risk, not only for their cash flow, which has been under scrutiny, but the housing market as a whole.
This video goes over some of these changes.