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Table of Contents
Recent Changes Affecting FHA Mortgage Loans...........................What is an FHA Mortgage Loan?....................................................4Who Should Get an FHA Mortgage Loan?.....................................6Interest-Only Mortgages..................................................................8Option ARMs...................................................................................9FHA Mortgage Loan Requirements...............................................0How to Obtain an FHA Mortgage Loan........................................4Checklist for Obtaining an FHA Mortgage Loan..........................8Other FHA Programs......................................................................9
FHA Renancing............................................................................21
 
RECENT CHANGES AFFECTINGFHA MORTGAGE LOANS
Fannie Mae Pricing Adjustments for 2008
This recent news will have an effect on how many borrowers consider FHA loans. New pricing adjustments
based on credit scores will go into effect for Fannie Mae and Freddie Mac on March 1st, 2008, though somelenders may begin enacting the new standards as early as January 2008. These adjustments will make FHA
loans a better alternative for consumers with a sub-680 credit score.
Details on the new Fannie Mae / Freddie Mac Pricing Adjustments
Credit scores between 679 and lower have been divided up into four categories, each with a correspondingpercentage of the loan to be paid as an additional fee. Here’s the Credit Score Categories and theircorresponding fee percentages:
• 660 – 679: 0.750%
• 640 – 659: 1.250%• 620 – 639: 1.750%• 620 or lower: 2.000%
This means that if your credit score is, for example, 645 and you were purchasing a mortgage on a $300,000home; you would be forced to pay a credit-based fee of $3,750. If your credit score is 630 your fee would bumpup to $5,250 and $6,000 for a credit score below 620.
Borrowers will have three options for paying their credit-based fees. They can accept a higher interest rate that
will account for the fees in a higher cost, build the fee into the new loan amount (only on a renance) or bring
extra cash to the table. Also effective in early March on all loans is a quarter-percent delivery fee.
FHA Modernization Legislation
HR 1852, the Expanding American Homeownership Act, is legislations to reform and modernize the FHAprogram. HR 1852 has been passed in the House and is awaiting voting in the Senate. A similar bill has beenproposed in the Senate and the nal result may be a combination of the two.Under HR 1852, changes to FHA would be made in the following areas:
•
Loan Limits
o Mortgage limits would be increase for borrowerso This will allow FHA to become a realistic option for those in high cost areas
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