{"id":158307,"date":"2023-09-18T12:31:00","date_gmt":"2023-09-18T18:31:00","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=158307"},"modified":"2024-02-29T18:01:07","modified_gmt":"2024-03-01T01:01:07","slug":"government-to-make-fha-loans-more-accessible","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/government-to-make-fha-loans-more-accessible","title":{"rendered":"The Government Wants to Make FHA Mortgages More Accessible\u2014How Will This Impact Investors?"},"content":{"rendered":"\n<p><span data-preserver-spaces=\"true\">The Federal Housing Administration&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.hud.gov\/sites\/dfiles\/SFH\/documents\/SFH_FHA_INFO_2023-75.pdf\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">made a move last week<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;that will make it a little easier\u2014at least for some borrowers \u2014 to get an FHA loan moving forward. Thanks to a new waiver, lenders no longer have to flag an FHA loan rejection in the agency\u2019s system.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Previously, this flag was used to alert future lenders that a borrower had been denied an FHA loan. It stayed tagged to the borrower\u2019s name and Social Security number for six months and required a review from the local FHA Homeownership Center to be removed.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Apparently, though, the system\u2014which has been around since 1990\u2014is less than useful in today\u2019s environment. As HUD\u2019s Mary Jo Houton noted on the waiver form, \u201cUnder the current lending environment, considering credit reporting technology and FHA system updates, there is minimal value to the Mortgage Credit Reject screen.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Essentially, there was a time when safeguards like this were needed\u2014and it may have been pretty helpful back in the post-housing market crash days. But today, with advanced credit reporting and much stricter lending standards, the flag holds little weight. It also adds an extra hurdle to an already laborious process.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">As the agency put it, \u201cFHA will no longer require lenders to enter rejection information in FHAC, streamlining the loan underwriting process and removing an unnecessary barrier for borrowers who wish to obtain FHA-insured financing.\u201d<\/span><\/p>\n\n\n\n\n\n\n  <div class=\"lg:block\" x-data=\"{ ad_block_block_6508b3b287777: popAds(1) }\">\n      <template x-for=\"ad in ad_block_block_6508b3b287777\">\n        <a\n          :href=\"ad.linkURL\"\n          class=\"no-underline text-black\"\n          x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/government-to-make-fha-loans-more-accessible', ad.sponsor, ad.title, ad.id, 'blockAdClicked', 'blockAd', '')\"\n          target=\"_blank\">\n          <div\n            class=\"py-4 border-b flex flex-col flex-nowrap text-sm border-t px-0 rounded-none\"\n            x-init=\"\n              analytics.track('blockAdLoaded', {\n                referrer: 'https:\/\/www.biggerpockets.com\/blog\/government-to-make-fha-loans-more-accessible',\n                sponsor: ad.sponsor,\n                ad_title: ad.title,\n                ad_page_location: ''\n              })\n            \"\n            x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/government-to-make-fha-loans-more-accessible', ad.sponsor, ad.title, ad.id, 'blockAdViewed', 'blockAd', '')\">\n            <div><span class=\"text-xs text-slate-light block bg-slate-50 p-1 inline-block rounded-md\">Sponsored<\/span><\/div>\n            <div class=\"flex items-center text-sm space-x-4\">\n                <img :src=\"ad.imageURL\" :alt=\"ad.imageAlt\" class=\"h-10 w-10 object-cover rounded-full\">\n\n                <div clas=\"text-sm\">\n                    <span class=\"font-bold block\" x-text=\"ad.sponsor\"><\/span>\n                    <span class=\"text-slate\/80\" x-text=\"ad.description\"><\/span>\n                <\/div>\n            <\/div>\n\n            <div>\n                <span class=\"font-bold\" x-text=\"ad.title\"><\/span>\n                <p class=\"mt-2 text-slate\/80\" x-text=\"ad.body\"><\/p>\n                <span class=\"mt-2 text-themeBlue block mt-2 underline\" x-text=\"ad.linkTitle\"><\/span>\n            <\/div>\n          <\/div>\n        <\/a>\n      <\/template>\n  <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What the Waiver Means for Investors<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Don\u2019t let visions of subprime lending and 2008 haunt you. FHA\u2019s waiver doesn\u2019t mean lenders won\u2019t know of past denials, nor will they start lending to borrowers who aren\u2019t properly qualified. They\u2019ll just rely on&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/why-credit-scores-matter-how-to-improve-them\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">credit reports<\/span><\/a><span data-preserver-spaces=\"true\">\u2014as they already do\u2014to spot past credit inquiries and red flags rather than FHA\u2019s internal system.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">For investors&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/best-deal-ever-show-6-using-fha-to-house-hack\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">using FHA loans to buy (and live in) two- to four-unit properties<\/span><\/a><span data-preserver-spaces=\"true\">, this could be a good thing\u2014at least if you were denied an FHA loan at one point or run the risk of denial next time you apply. The downside may be in the extra interest this waiver creates in getting FHA loans and, subsequently, the lower-cost housing market.&nbsp;<\/span><\/p>\n\n\n\n<p><strong><em><span data-preserver-spaces=\"true\">Related:&nbsp;<\/span><\/em><\/strong><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/fha-loan-pros-cons\" target=\"_blank\" rel=\"noopener\"><strong><em><span data-preserver-spaces=\"true\">Should You Start Investing With an FHA Loan? Here\u2019s Why\u2026 Or Why Not<\/span><\/em><\/strong><\/a><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Since FHA loans allow for lower credit scores and higher DTIs, they tend to be used by borrowers with fewer financial resources. According to the Consumer Financial Protection Bureau, the median loan amount for FHA loans was just $241,000 in 2021. For conventional loans, it was $290,000, while VA loans sat at a median of $316,000.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">All this is to say: Investors eyeing lower-cost properties may find themselves with some newfound competition.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">How much more competition? It\u2019s hard to put a number on it. FHA loans currently account for only about 14% of all mortgage loans, and beyond that, just 16% get denied, according to the most recent numbers. This means it will really depend on where you\u2019re buying and how popular FHA loans are with borrowers in your area.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Bottom Line<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">There\u2019s no telling just how much this will impact things on the ground, but the waiver officially goes into effect today\u2014so the effects could be felt fairly soon.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">FHA has said the waiver will be permanent. The Mortgage Credit Reject screen will no longer show up in the agency\u2019s lender-side system as of today, and its removal will be reflected in the next version of its Single Family Housing Policy Handbook.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_939c8f75f55c36c9a0c6911295b21693\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_c3a74fb11bb8aa5d8de3ea7ece06a05a\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p><\/p>\n\n\n\n<div id=button-custom-event-block_2a6386b25371ef5f44a731ccfb7e177f class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Lender Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/government-to-make-fha-loans-more-accessible&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/government-to-make-fha-loans-more-accessible&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>With housing affordability at all-time lows, the government is looking to increase the availability of these loans. What doors does this open for investors?<\/p>\n","protected":false},"author":613679,"featured_media":158319,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7384],"tags":[],"class_list":["post-158307","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics-policy"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/158307","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613679"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=158307"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/158307\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/158319"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=158307"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=158307"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=158307"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}