In its HUD budget for FY 2005, the Administration also proposed a sub-prime FHA Payment Incentive Program, which would be targeted to serve families with “limited or weak credit histories.” A similar program was included in the Administration’s budget proposal for the current fiscal year, but it was deleted by the Congress.
Loans insured under this program would bear higher than standard mortgage insurance premiums, which would decrease after the borrower established a record of timely payment.
The Administration suggests an annual mortgage insurance premium not to exceed 1.0% for loans insured under this program, compared to 0.50% for standard FHA-insured loans. The program would assist an estimated 60,000 first-time home buyers.
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