FHA loans are attractive for borrowers who can't make a large down payment. They may get less attractive going forward.
FHA reserves, which cover loans gone bad, are running low. They're trying to beef up reserves and limit additional risks to the reserve fund and taxpayers. The challenge is reducing risk by just the right amount. Getting too strict may crush loan demand - which would otherwise help the housing market.
Currently FHA loans allow as little as 3.5% down. Proposed rules would raise the down payment to at least 5%. If buyers have more at stake, they're less likely to default and walk away from mortgages.
A few other proposed changes would also make FHA loans less attractive. You may need better credit scores, the insurance premiums might change, and it will probably get more difficult for sellers to help buyers by paying their closing costs.
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I really hope they dont tighten the rules its really going to slow down the housing recovery.