mortgage

FHA changes home mortgage rules

FHA changes mortgage rules
FHA changes mortgage rules

Federal Housing Administration home loans are getting a tuneup, with many changes going into effect Oct. 4.

Under new rules, potential borrowers will likely save thousands at closing. But those monthly mortgage payments will be a little higher.

In addition, FHA is setting a minimum FICO score of 500 for homebuyers. And borrowers with scores of less than 580 will have to put 10 percent down, instead of 3.5 percent.

If you're looking to buy or sell a home in the near future, FHA's changes are likely to impact your wallet. The agency purchases 30 percent of the residential market, up from 3 percent in 2007, according to the U.S. Department of Housing and Urban Development.

Recently, FHA opened its refinancing program to a larger section of homeowners who owe more than their homes are worth. The agency is also considering limiting seller cash contributions on mortgages to 3 percent of the home price, down from the current 6 percent.

Want to know what each of these changes could mean to your bottom line? Following is the breakdown:

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