The FHA Modernization Act will soon be reducing the 3% down payment requirement to 1.5%. This act will also increase the loan limit from $251,000 to $417,000. These two improvements will make it easier for home buyers around the country to get the home loan they need.
This act will also help people not looking to buy a new home. The FHA is another element that is being used right now to help people refinance to save their sub-prime loans. It is estimated that about 53,000 will have refinanced using FHA in the last four months. This is good news since statistically, FHA-backed loans less often result in foreclosure than many other types of loans.
It’s tough to tell who qualifies for the new 1.5% down payment and the new loan limit because it’s simply so new. It will take a while for lenders to get used to these new requirements. But, FHA loans in general are becoming more popular with this market. The Federal Housing Administration is working to insure more than 240,000 FHA loans for 2008 – that’s almost two and a half times the FHA loans made in 2007!