Changes to FHA guidelines may leave many home buyers unable to qualify.
Could you imagine? What an horrible surprise if you get your offer accepted and you are no longer qualified for an FHA loan?
Why you may no long be qualified? FHA approvals require a case number before the terms of the approval can be locked in.
You must have a property address (aka accepted purchase offer) before a FHA loan can be approved and guaranteed.
This approval is specific to the property. If your lender has given you an approval and you’re still out looking for homes – you MUST get re-approved now.
Starting October 4th, new case numbers will issued under considerably different qualifying guidelines.
FHA changes that will affect your pre-approval
There are a couple of major changes could result in your current pre-approval not being worth the paper it’s written on.
First, we’ve written extensively about the changes in the monthly mortgage insurance premium change.
This will absolutely result in your monthly payment increasing.
If you are currently looking for a home in the range of the MAXIMUM you are qualified for – you now qualify for a little less home.
Second, credit score requirements for most buyers have increased from 620 to 640.
The credit score requirement isn’t a hard and fast rule set by FHA, but the big investors and banks have made the decision that they will only accept the higher score on Governement loans.
Good news is that there are no penalties or increase in costs if your credit score is at the minimum range.
Non-government loan programs have Fannie Mae risk based pricing (higher closing costs) if your credit score is below 720.
You are now empowered
Unexpected surprises and misinformation strip you of your ability to make informed decisions.
Now that you know about these changes, you are empowered.
If you are pre-approved, go back to your lender and have them update your information based on the new guidelines.
If your lender has not already contacted you….call me 🙂