FHA has been working with Congress since the release of the audit showing the agency may need a taxpayer bailout on what changes will be made to stabilize the FHA’s financial position. This week, the FHA issued a letter to Senator Corker outlining some significant changes not previously mentioned. These will have an immediate impact on consumers.
- Raising DTI for borrowers with low credit scores. FHA will require borrowers with credit scores below 620 to have a maximum DTI (debt to income ratio) of 43 percent
- Moratorium on full cash out HECM (reverse mortgages)
- Raising the down payment for loans above $625,500 to 5 percent
- Greater oversight on borrowers who are trying to obtain a new FHA loan 3 years following a foreclosure.
