FHA plans to impose significant restrictions on the amount of money a seller can contribute to closing. FHA has always been good in the residential real estate market in offering down payments of 3.5%, despite the recession and growing its market share by more than 20%. The problem is while doing this the FHA’s insurance fund capital reserves have deteriorated well below congressional mandated levels. FHA delinquency has risen to 12.4% in that time, almost double that of VA which sits at 6.6%. With all of this happening at the same time, FHA is under fire to get their books back in order and rebuild their reserves.
The changes may not be all they have in store for FHA but the initial changes will be painful enough. So, if you are active duty military or a veteran with an honorable discharge, a VA loan is the way to go. It is still $0 down with no monthly mortgage insurance and the sellers can still help pay a good portion of your closing costs. With interest rates still historically low and housing prices at their lowest in years, now is the time to buy.
If you have any questions about your VA qualifications, please contact Creekside Mortgage, Inc. at 360.571.LOAN (5626).