One of the major benefits to seeking an FHA (Federal Housing Authority) insured loan over a conventional loan is that the allowable closing costs contribution by the seller could be as high as six percent of the value of the home. With a conventional loan the maximun allowable amount is usually three per cent.
Well under new guidelines proposed by FHA this allowable closing help is going to be reduce to not more than three per cent. This will have an impact on home sales as many first time purchasers are short on cash and need the maximum closing assistance to buy a home. I don't think the impact will be serious but it is not going to help in this slow market that we are currently mired in. The date is not set in stone but look for this change to come about in the next month or so.
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