New 2015 FHA Changes

There are new 2015 FHA changes that may have a significant impact for some buyers.  This may lead to greater urgency for some home buyers.

  1. Effective with FHA case numbers assigned on or after September 14th the maximum seller concession is being reduced to 3%.  Currently, the maximum seller concession is 6%. This is a 50% reduction.
  1. The down payment will continue to be 3.5%. However, if down payment proceeds are gifted to the buyer, lenders will soon be required to obtain a bank statement from the donor’s account.  They will also source any large deposits to the account in order to document that the donor’s funds came from an acceptable source.
  1. Another big change is that student loan payments will be counted as part of debt to income ratio even if they are deferred for over 12 months.  This is potentially a significant issue for some buyers with major student loan balances.
  1. If an employee has changed jobs more than three times in the previous 12 months or has changed lines of work, the lender must take additional steps to verify and document the stability of the borrower’s employment income. Gaps of employment greater than six months will require six months on the new job, regardless of what created the gap. Raising a family is no longer an acceptable reason for the gap.

It looks like FHA is tightening up their guidelines a little bit. If you believe that any of these changes will impact your qualifications for a FHA loan, you may want to double check with your lender.  If you are looking to buy this summer, this may push up your decision timeline.
If you are looking to buy or sell a home in the Chicago area, give me a call or email.

Millie C. Lumpkin, Broker