
FHA loan originations are plunging because high borrowing costs turn off potential buyers, and risks of put-backs make lenders reluctant. The biggest barrier to first-time homebuyers is saving for a down payment. As a result, most first-time homebuyers turn to the FHA because the FHA only requires 3.5% down, but as everyone who's gone down that road also quickly learns, FHA financing is expensive; in fact, FHA financing is so expensive, it's like taking out a 12.4% second mortgage! Many have quipped that FHA has become the replacement for subprime. They have very low standards for qualification (a 580 FICO score), a very low down payment requirement (currently 3.5%), and as a result, they stepped into the void left by the…[READ MORE]