Industry NewsMortgage

Buyers rush to beat FHA tightening

Demand for FHA-backed loans up 17.2%

Homebuyers rushing to beat new FHA credit score and downpayment requirements may have helped push demand for purchase loans last week to their highest level since the expiration of the federal homebuyer tax credits, the Mortgage Bankers Association said in releasing its Weekly Mortgage Applications Survey.Applications for purchase loans jumped a seasonally adjusted 9.3 percent during the week ending Oct. 1, thanks largely to a 17.2 percent increase in applications for FHA-backed loans, the MBA said. Applications for conventional loans were also up 3.6 percent from the previous week.Under changes announced in July, FHA borrowers assigned case numbers after Oct. 4 will need a 580 FICO score in order to purchase a home with the minimum 3.5 percent downpayment.Borrowers with scores between 500-579 must make downpayments of at least 10 percent to qualify for the government-backed mortgage insurance program, and those with scores below 500 won't qualify for the program at all, HUD said in a ...