HUD (Federal Housing Administration, US Department of Housing and Urban Development) has just announced some important changes for 2009 for FHA loans.

Down Payment:

Pasadena home buyers will now need to come up with 3.5% to put down on the Pasadena home for their choice.  Previously, buyers needed to have 3% of their own money which they could use towards down payment and closing costs.

In 2009, buyers need to have 3.5% to apply towards their down payment and will need to have additional funds to cover closing costs.

Pasadena home sellers can contribute up to 6%, but still this means a little more cash outlay to the borrower.

Minimum Investment:

FHA not only has a minimum down payment requirement, they also have a minimum investment requirement. So, currently you could put 2.85% down on the purchase of a home and still be required to contribute to some of the closing costs required to make that purchase. FHA is, again, simplifying the matter and making the minimum investment requirement 3.5%, too. So Pasadena home buyers no longer need to complete calculations multiple times to make sure they are satisfying all the requirements of FHA for down payment and minimum investment. If you meet the minimum 3.5% down payment, you will have met the 3.5% minimum investment requirement, too.

Maximum Loan to Value:

Up until now FHA did not have a maximum loan to value (LTV) ratio, even though they did have the minimum down payment and minimum investment requirement, that kept most people from going over 100% LTV. FHA has limited the LTV ratio to 100% in 2009 to make sure this does not become a problem.

Loan to Value simply refers to the percentage of the home purchase price that is being provided in the form of a mortgage.

Loan Amount Limits:

2009 FHA loan limits for single family homes were lowered from $729,750 to $625,500. An FHA loan limit calculator can be found on the HUD FHA website.

Interesting FHA facts:

• Did you know that FHA is the only government agency that operates entirely from its self-generated income and costs the taxpayers nothing. The proceeds from the mortgage insurance paid by the homeowners are captured in an account that is used to operate the program entirely.
• The FHA and HUD have insured over 34 million home mortgages and 47,205 multifamily project mortgages since 1934.
• FHA currently has 4.8 million insured single family mortgages and 13,000 insured multifamily projects in its portfolio.
• If you are considering purchasing a Pasadena condo with FHA funds, you need to make sure that the condo complex is approved for FHA loans with HUD.  Here’s a link to all FHA approved condos – FHA approved condo finder.

Posted by Irina Netchaev, Pasadena Realtor