November 16, 2017
Do FHA loan requirements change each year? This area can be a bit confusing because some aspects of the FHA loan program have changed in recent years, and some things are updated on a yearly basis.
But the basic structure of the FHA loan program including FICO score minimums, appraisal rules, and occupancy requirements? These do not change from year to year.
Do FHA Loan Rules Are In HUD 4000.1 Change Annually?
HUD 4000.1 is the FHA Single Family Home Loan Handbook. It contains all the basic rules and requirements for FHA home loans. It lists the FICO score requirements, loan repayment history rules, debt-to-income ratio guidelines and other issues that affect FHA loan approval.
These requirements do not change from year to year, but are subject to revision based on changes to FHA/HUD policy, new or modified federal laws, and updates to outdated or expired policy. The short answer is that in areas like these, changes are applied on an as-needed basis rather than making annual updates or changes.
Do Borrower Requirements Change Annually?
The basic requirements do not change on a regular basis, but are subject to the “as-needed” alterations mentioned above. However, that does not speak to any changes your participating lender might enact. Some lenders may or may not review their policies on a yearly basis but that is up to the lender. Remember that FHA loan rules are not the only ones that affect your transaction. Lender standards, state law, and other requirements may factor in, and such things may or may not be revised yearly.
Certain aspects of FHA mortgages are predictable and generally do not change. FICO score requirements, down payment percentage minimums, mortgage insurance premiums, and other factors are predictable from year to year unless major policy changes in those areas are announced. They are generally not up for review or revision on a regular basis.
How Does The FHA Implement Changes When They Do Occur?
Since there’s no routine, annual revision of FHA loan policy, when there are changes to HUD 4000.1 or revisions to policy that have an immediate effect on the FHA mortgage loan process, the FHA and HUD publish the guidance in the form of an FHA Mortgagee Letter, which is posted on the FHA official site. These mortgagee letters describe the policy changes, their effective dates, and any applicable expiration dates.
What Aspects Of FHA Loans DO Change Every Year?
FHA loan limits by county are revised each year. These limits are published when the FHA and HUD are ready to do so, but in general a few weeks before the end of the calendar year you will see the following year’s limits published on the FHA official site. There are also revisions to the FHA’s High Cost Area list of housing markets that feature higher FHA loan limits due to elevated construction costs, house prices, and other factors.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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