The simplified and reduced down payment requirements for FHA loans passed by Congress two years ago will expire at the end of September unless extended or made a permanent part of the HUD registry.
Without action prior to September 30, lenders will still be able to close FHA loans but will revert to the previous downpayment requirements. The largest impact of reverting to the pre-1998 regulations will be felt by borrowers wanting FHA financing above $125,000 although every FHA loan will be affected.
Customers looking for FHA financing or under contract using FHA financing should be advised that if their FHA loan cannot close by September 30 they may have a larger FHA downpayment requirement and may need to consider a change of loan programs if this is a qualifying issue.
Hopefully Congress will not use this issue as a political football, but it is an election year and you never know what may transpire.
