Simply...you will be required to increase the amount of up-front cash when using FHA loans. Up-front insurance premiums are increasing from 1.75% to 2.25% to be collected at the settlement table.
NEXT QUESTION: WHY IS THIS HAPPENING?
There are a couple of reasons why FHA is requiring the increase. First reason, is that the FHA is financially strapped with FHA currently backing 30% of all loans and 20% of refinanced loans. Second reason is the belief that buyers will be more responsible regarding their financial well-being in the home if they have more invested.
WHAT ELSE IS IMPORTANT IN THE UPCOMING FHA POLICY CHANGES?
FHA is reducing the amount that sellers are able to contribute to the buyer's closing costs and free upgrades. The new policy will reduce from 6% to 3% of the salesprice toward closing subsidy.
