Minneapolis FHA Duplex Buyers May Need More Down

If you’ve been waiting until after the holidays to buy a duplex, it may prove you may want to get out of the mall and into my office.

Why?

It seems buying your first house or duplex may soon cost you more.

HUD Secretary Shaun Donovan told Liane Hansen of NPR‘s “Weekend Edition Sunday” that in an effort to boost FHA  reserves back to the minimum standards Congress set for the agency, “We’re going to raise some of our standards.”

In the interview, Donovan said that in addition to raising the level of enforcement of adherence to underwriting standards on lenders who offer FHA loans, some of the FHA loan requirements themselves are probably about to change.

Donovan said, “We are going to require somewhat more skin in the game from our borrowers to insure that if we do get another decline in the market ahead of us that we don’t see foreclosure rates and delinquency rates rise in the FHA portfolio from where they’ve been.”

While he promised an announcement of the specifics by the end of January, he did indicate the agency was leaning toward increasing the minimum buyer down payment from 3.5 percent to 5 percent.

The amount a seller may contribute toward a buyer’s closing costs may also be cut in half; dropping from the present maximum of 6 percent to  3 percent.

It’s likely that it will take some time after the January announcement to implement any changes HUD recommends.

Nonetheless, if the increased down payment offers a greater challenge to your buying ability, the time to shop is now.