Changes To HUD Guidelines on FHA Loans For 2023 (2024)

FAQs

What are the new FHA changes for 2023? ›

FHA loan limits increase most years, and 2023 was no different. For this year, the FH floor — the cap in most housing markets — increased from $420,680 to $472,030, a 12% increase. The ceiling limit in high-cost markets also increased considerably, jumping from $970,800 in 2022 to $1,089,300.

What's changing? This year, the FHA plans to impose a minimum credit score requirement: 500. Borrowers with credit scores below 580 would have to make a down payment of at least 10 percent instead of the usual 3.5 percent minimum.

Unlike lead generation websites, we do not sell your information to multiple lenders or third-party companies. FHA Loan Limits 2023 California is $472,030 and goes up to $1,089,300 for high-cost counties for one-unit properties.

FHA Connection (FHAC) has revised its sign on process to improve service and security. A new legal notice agreement and Multi-Factor Authentication (MFA) are now used for signing on to FHAC. For more information, please see the MFA User Manual and watch this instructional video.

The 90-Day Flip Rule

If the 90-day rule applies to the property, the lender is likely to reject the loan. This rule protects borrowers and lenders from investing in worn-out properties. Hence, as a buyer, you should wait for 90 days before you can buy a flipped home.

What Changed With LLPAs. The changes to LLPAs included the addition of higher credit tiers and lower LLPAs for homebuyers making low down payments. While a 740 or higher FICO score could previously get you the best mortgage rate, you now need a score of 780 or higher to get the lowest rates.

The three primary factors that can disqualify you from getting an FHA loan are a high debt-to-income ratio, poor credit, or lack of funds to cover the required down payment, monthly mortgage payments or closing costs.

Some reasons a seller might refuse an FHA loan include misconceptions about longer closing times, stricter property requirements, or the belief that FHA borrowers are riskier.

In response, FHA created national lending standards and revolutionized the mortgage market by extending insurance against default to lenders who originated loans as long as they met two key criteria: they would need to offer fixed-rate, long-term, fully amortizing mortgages, and they would need to ensure that mortgages ...

The FHA establishes loan limits annually based on the median home prices in metro areas and counties. The maximum loan amount is 115% of the area's median home price, subject to a national floor and ceiling. In 2024, the national floor is $498,257, and the national ceiling is $1,149,825.

What are the income requirements for a FHA loan? ›

For example, a homebuyer might ask, "Do I need to make at least $50,000 a year to get approved for an FHA loan?" The answer to this question is "no". There are no minimum income requirements for FHA loans. However there is often a maximum debt-to-income ratio (DTI) requirement that does affect your eligibility.

FHA minimum credit score

If you put just 3.5 percent down, the minimum credit score for an FHA loan is 580. You can qualify with a score as low as 500, but you'll need to make at least a 10 percent down payment.

This means that the maximum monthly mortgage payment is limited to 75% of the total rental income. This percentage must be at least enough to cover the mortgage payment known as PITI (Principal, Interest, Taxes, and Insurance).

Single Family Housing Policy Handbook 4000.1 Published Today

Through this update, Handbook 4000.1 now contains policies for the entire FHA Single Family Housing Program, including comprehensive and authoritative policies for the HECM program.

FHA loans are sometimes viewed as less favorable than conventional loans in a competitive market. You could end up paying more over the long term. Your interest rate may be lower, but your APR, which is the annual cost of the loan, can sometimes be higher than conventional loans.

Generally, borrowers who have experienced a foreclosure must wait at least three years before they can qualify for an FHA loan.

FHA minimum credit score

If you put just 3.5 percent down, the minimum credit score for an FHA loan is 580. You can qualify with a score as low as 500, but you'll need to make at least a 10 percent down payment.

FHA Mortgage Rate Predictions for 2024

Business Insider repeats the Fannie Mae prediction for 2024 that rates may reside between 6.4% and 7.1% for 30-year fixed-rate conventional mortgages. The National Association of Realtors takes a less conservative approach, predicting rates could fall as low as 6.1% in 2024.