Loan Changes Coming to FHA

There are a few changes coming early this year that will
impact specific real estate markets or price points across the Bay Area.  Yesterday’s WSJ reported that the FHA
(a type of government-backed loan program) is running short of their reserves
so they intend to increase their loan placement fee to 2.25% (from the current

What does this mean? 
If you get an FHA loan, you will need to pay a higher fee to “buy” the
loan.  For a typical $500k house
with only 10% down, your loan fee just went up to $10,125 from $7,875.  It is probably not enough to crash the
housing market, but it will price some buyers out who will have to delay their

Recommendation: If you are likely to use an FHA loan —
meaning you have less than 20% for a down payment or you have credit issues
that make a conventional loan rate very high, then I would say you should move
quickly to find the right house and get an offer accepted before FHA fees go


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