House Passes FHA Reforms; Affordable Florida Home Loan Options Made Available

In what is billed as “far-reaching legislation,” the U.S. House of Representatives has passed The Expanding American Homeownership Act, which will increase homeownership opportunities for millions of Americans.

The bill will modernize the Federal Housing Administration (FHA), returning it to its traditional role as an important financing option in today’s housing market.

This legislation should be especially helpful locally - it’s no secret that lower-income families cannot afford Florida home loans in cities around the state at the moment.

“I applaud the House for passing this far-reaching legislation and express appreciation for the leadership provided by Representatives Bob Ney, Maxine Waters, Gary Miller, and Patrick Tiberi,” said Housing and Urban Development Secretary Alphonso Jackson.

The Expanding American Homeownership Act will enable FHA to reach more prospective borrowers and allow millions more low- and moderate-income families to achieve the American dream of homeownership. Many of these borrowers currently have little choice but to pay consider subprime Florida home loan rates because FHA lacks the ability to offer an affordable financing option.

The Expanding American Homeownership Act will:

1) Eliminate the current statutory three percent minimum down payment, reducing a significant barrier to homeownership. FHA’s existing down payment requirement doesn’t meet the demands of today’s marketplace, where most first-time homebuyers put down two percent or less. The “new” FHA would offer a variety of down payment options.

2) Create a new, risk-based insurance premium structure for FHA that would match the premium amount with the credit profile of the borrower. It would replace the current structure, in which there is standard premium amount for all borrowers, while still protecting the soundness of its Insurance Fund. FHA would have the flexibility to charge a lower premium for low-risk borrowers, and to charge higher-risk borrowers a slightly higher premium.

3) Increase and simplify FHA’s Florida home loan limits. FHA’s loan limit in high-cost areas would rise from 87 to 100 percent of the GSE conforming loan limit and in lower-cost areas from 48 to 65 percent of the conforming loan limit. This change is crucial in today’s housing market.

In many areas of the country, the existing FHA limits are lower than the cost of new construction, eliminating FHA financing as an option for buyers of new homes in those areas.

Combine this legislation with the recent grant for affordable Florida housing and things should be looking up for lower-income buyers.