June 30, 2021
The month of June is National Homeownership Month, and now that the month is over, the FHA and HUD are reminding potential FHA borrowers about government initiatives to encourage homeownership, prevent discrimination, and enable first-time homebuyers to consider purchasing a new house.
The HUD official site announced at the end of June that there are more initiatives coming to improve free access to housing and further prosecute violations of the Fair Housing Act.
According to a press release on HUD.gov, this process began in the first days of the Biden Administration with the newly-sworn-in President of the United States issuing a memorandum to the Department of Housing and Urban Development “to address discrimination in our housing market”.
Since those earliest days, HUD has issued a proposed rule “on countering housing practices with discriminatory effects” and an interim final rule on the “legal duty to Affirmatively Further Fair Housing in the Federal Register.”
The press release holds that those rules will help to “provide the legal framework for HUD to require private and public entities alike to rethink established practices that contribute to or perpetuate systemic inequality in housing and recognize and address longstanding fair housing issues in our communities”.
Another type of progress on the horizon from HUD? The FY2022 budget for the agency includes millions of dollars intended to be used for a new program called FirstHOME Homebuyer Assistance.
This program addresses housing needs in “insular areas” and elsewhere to provide “sustainable homeownership”.
There is also news of new FHA programs that can help eliminate or reduce barriers to home ownership–these are loan programs that can be combined with the FirstHOME program mentioned above to help first-time home buyers.
Remember, you do NOT have to be a first-time buyer to use an FHA home loan, but these new programs are definitely intended to help those who have never purchased property before.
These announcements come on the heels of work already done by the FHA and HUD to expand access to affordable housing; those efforts include updates on FHA loan policies for counting student loans as monthly debt.
The FHA changed its policies on how monthly student loan payments should be calculated for the purposes of establishing the applicant’s debt-to-income ratio.
The move is in order to “…remove barriers and provide more access to affordable single family FHA-insured mortgage financing for creditworthy individuals with student loan debt, which has disproportionate impact on communities of color.”
What kinds of policy changes? FHA’s new rules end the previous requirement that participating FAH lenders “calculate a borrower’s student loan monthly payment of one percent of the outstanding student loan balance for student loans that are not fully amortizing.”
The new policy counts the actual student loan payment, “more closely aligning FHA policies with industry standards”.
If you are not sure how any of the above might affect your home loan application now or in the future, it’s a very good idea to talk to a participating FHA lender to discover what these changes might mean for you.