FHA changes home mortgage rules
Eligibility of underwater homeowners
FHA refinancing loans are now available to greater numbers of homeowners who owe more than their homes are worth.
Old rules: Some underwater borrowers were able to qualify for FHA refinancing loans.
New rules: The pool of such borrowers has been expanded with more concrete underwriting requirements and nonmonetary incentives to lenders who participate.
Homeowners may be eligible if all of the following apply:
- Are trading a non-FHA mortgage for an FHA mortgage.
- Have a credit score above 499.
- Are current on the mortgage.
- Can get the lender or investor to write off at least 10 percent of the old loan.
- Are financing no more than 97.75 percent of the home's value.
What you need to know: This temporary program is now in effect. The new rules expire in December 2012. So if you're considering FHA refinancing, you want to act before then.