Every day, I see that loads of folks are searching for information on the changes in FHA down payments from 2008 to 2009. Since it seems to be a hot topic, here’s a little update on the details.
For several years buyers were able to purchase a home with little or no money down. They paid their closing costs and insurance and moved in. Often, the seller paid enough in assistance that the buyers were able to leave the closing table with almost no cash out of their own pockets. Those free wheeling, give a loan to anyone with a pulse days are over.
Once the mortgage climate changed and the lending guidelines became stricter (or more normal, depending on your viewpoint) buyers were left out in the cold if they had not saved any money. Again, not necessarily a bad thing. Owning a home can be expensive. Things break and need to be repaired. Insurance needs to be paid. Property taxes are due every year like clockwork. If a buyer’s budgeting skills are not good, they can find themselves facing a run down home with no funds to keep it up with. In the past, it was just a little easier for people to walk away from a house that they didn’t have a real stake in.
Today, the financing of choice for most buyers is FHA. But, even that has changed. In 2008, FHA required that a buyer have 3% of their own money invested in a purchase. That could be in the form of a down payment, closing costs, or prepaid items such as insurance and taxes, as long as the buyer had 3% of the purchase price.
In January of 2009, new FHA down payments went into effect. Now, buyers need a down payment of 3.5% of the purchase price of a home. This 3.5% is in addition to the costs of inspections, appraisal, closing costs, hazard and flood insurance and title insurance. Bottom line…it became more expensive for someone to buy a home.
EDITED 3/2/2009 TO UPDATE THE LOAN LIMITS
The FHA loan limit on the West Bank of New Orleans is $287,500 for a single family home, $368,050 for a 2 family (doubles or duplexes) home, $444,900 for 3-plexes and $552,900 for 4-plexes. For homes priced at the current limit, the minimum down payment is $10,062.50 for a single family home and $12,881.75 for a double or duplex. This is before any other purchase costs such as insurance, inspections and lender fees are considered. FHA loan limits in other areas
Buyers today need to be prepared to have cash on hand before looking for their new home. They also need to take the time to meet with a lender to determine a price range that not only can they afford, but one that they are comfortable with.
Need a recommendation for a professional, local lender? Contact the West Bank Living Team. It would be our pleasure to help point you in the right direction and guide you through the entire buying process.
- Home Buying Tips
- Algiers homes for sale
- Belle Chasse homes for sale
- Gretna LA homes for Sale
- Harvey homes for sale
- Westwego homes for sale
Copyright 2009. West Bank Living. All rights reserved.
You might also like:
