Nashville area home buyers have been using FHA loans at a rapid clip. About 30% of local mortgages are FHA insured loans.
FHA loans allow Mt. Juliet home buyers to buy a home with as little as 3.5% down. First time home buyers in Mt. Juliet and Nashville use FHA loans almost exclusively.
Now the FHA is changing it’s requirements for home buyers.
1. In order to qualify for 3.5% down payment, borrowers will need a credit score of at least 580. Those with lower scores will need to put at least 10% down.
2. Home sellers will be allowed to assist buyers up to a maximum of 3% of the home price. on a typical Nashville home, selling for $150,000, the seller will be allowed to pay up to $4500 (3%) to the buyers closing costs and no more. Previously sellers could contribute up to 6%.
3. Home buyers putting less than 20% down will be required to pay Private Mortgage Insurance of 2.25% of the loan. That typical Nashville home for $150,000 will need $3,375 added to the loan amount to cover this insurance. Previously this would have cost the home buyer $750 less.
” This adds to the confusion, especially for first time buyers” says Tom Matthews of Home Town Loan in Mt. Juliet, ” but FHA is still the best mortgage available for the majority of young buyers today’s first time buyers.”
FHA says these new rules will keep them solvent and increase their ability to help buyers. “No one wants to see a taxpayer “bailout” of FHA in these times”, noted Cathy Wood, Crye-Leike Realtors, Mount Juliet. ” We had over 20 home buyers in Mt. Juliet take advantage of FHA loans in 2009 alone.”