Easier To Get If You Don’t Need It
For those that have the resources for conventional financing the goalposts are still in the same place as in past decades. That is the advantage of being in a relative position of strength, not much has changed. It is in the arena of government backed financing for buyers who have less cash available to them that the changes are going to be most keenly felt.
Changes To Federal Programs
In previous decades the ability to qualify for an FHA backed loan was relatively simple and as time progressed became the source of much abuse. This was a major part of the problem that led to the collapse of the housing market in 2007. Between low down payments and the acceptance by loan originators of poorly documented applications there was an unsustainable expansion of lending that resulted in rampant foreclosures and negative equity.
Whether a repeat of this is avoided in the future or not is still to be seen but at present qualification for FHA loans has more stringent requirements than before the crisis. Traditionally, FHA finance has been the best choice for first time buyers. The low down payment means less time saving up before joining the home owning class. The lack of equity is covered by an insurance policy that guarantees the performance of the loan to the lender. One of the changes is that insurance premiums are rising in response to the pressure on HUD to shore up its finances.
If you have shaky credit you might have more difficulty getting finance, not because of the HUD rules but because lenders are more cautious than they were leading up to the crash. Your credit worthiness and overall financial condition will be reflected in the interest rate that you are offered but the cutoff will be lower than it was in the past.
Tightening Terms In Improving Times
Previously, the cost of so-called sub-prime lending was often concealed by teaser low rates that would adjust upward dramatically at some point. This was sold borrowers with a promise of refinancing in the future. This has gone away so that, while you might get FHA financing based on your credit and assets, there will be many other applicants who cannot.
For buyers with cash it is business as usual and even for those who wish to partake of a program such as FHA, assuming reasonable financial strength, the possibilities are still there. Where there is change is the teaser rates on subprime loans that adjust ruthlessly a few years down the road. The assumption of a glowing market condition and skyrocketing prices is no longer part of the equation. The irony of this situation is that prices are presently going up. Even if you qualify for some level of home loan you may not be assured of enough to cover the financing for the home that you truly want.