The Mortgage Bankers Association has no problem with the Federal Housing Administration’s decision to increase the downpayment requirements on FHA-insured jumbo loans.
“Now that the nation’s housing market is improving, the time is right for FHA to thoughtfully make policy changes that encourage the return of private capital to the nation’s housing market,” the MBA says in a letter to HUD.
On FHA loans with a principal balance above $625,500, the agency intends to raise its downpayment requirement to 5% from 3.5%.
These higher-balance loans comprise less than 1% of FHA originations and hike in the downpayment requirement will have a “minimal impact” on the jumbo market.
However, the MBA wants to be sure lenders have enough time to implement the change.
“MBA requests that the effective date of the final rule be no less than 90 days after HUD publishes the implementing mortgagee letter,” the trade group says in the March 8 letter.