FHA raising FICO floor, reducing seller concessions

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FHA borrowers will soon need a 580 FICO score in order purchase a home with the minimum 3.5 percent downpayment, and won't qualify for the program at all if they have a score below 500.Federal housing officials are moving closer to implementing several policy changes announced in January that will also reduce the maximum allowable seller concession on FHA-backed loans from 6 percent to 3 percent and tighten underwriting standards for manually underwritten loans.The Department of Housing and Urban Development (HUD) on Thursday published a notice in the Federal Register outlining the details of the policy changes and the rationale behind them. HUD will consider public comments submitted by Aug. 16 before publishing a final notice that will include the implementation date for the changes.The policy changes are aimed at curbing losses that have drained FHA's Mutual Mortgage Insurance Fund, bringing its capital ratio below Congressionally mandated minimums.Other steps previously taken to st...