The Federal Housing Administration, which insures mortgages for many first-time homebuyers or those with minimal down-payments, is tightening its standards. In an announcement on Monday, the FHA announced that it would begin flagging more loans as high risk which would require them to undergo a more rigorous manual underwriting process.
While some experts are saying that the new standards will not have too much of an effect on those whom it it approves for an FHA loan, it will likely impact those with sub-par credit or higher than average debt-to-income ratios.
This latest move by the government agency is a reversal of a loosening of underwriting standards introduced in 2016. The FHA currently insures $1.3 trillion in home loans.
Meanwhile, conforming no-point 30-year fixed mortgage rates are averaging 4.125 percent, 15-year rates are near 3.625 percent and the 5-year ARM is averaging 4.00 percent.
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