The U.S. Department of Housing and Urban Development announced 14 changes to the Federal Housing Administration’s single-family mortgage insurance program, updating policies tied to appraisals, 203(k) rehabilitation loans, closings, lender requirements and loss mitigation.

FHA financing already shows up in many first-time buyer and affordability conversations, and the changes could reopen discussions with buyers who were stalled by cost, property condition or closing concerns.

The changes do not erase affordability challenges, but they could reduce some friction in FHA-backed transactions and make certain homes easier to discuss, especially lower-priced homes that need repairs.

Among the changes:

• FHA is reducing some appraisal field review requirements, which HUD said cost about $425 per review.
• The Limited 203(k) Rehab Loan Program will allow up to four draw requests per contractor, up from two, giving smaller repair projects more flexibility.
• FHA is eliminating a duplicative homebuyer notice form, which is expected to simplify closings.
• Early payment defaults tied to natural disasters will be permanently exempt from certain lender quality-control review samples.

“Every unnecessary regulation comes with a cost, and too often homebuyers pay the price,” HUD Secretary Scott Turner said in a statement.

Realtor.com senior economist Joel Berner said the changes could make FHA closings “faster and simpler” for more borrowers, though he also noted that FHA loans can still face delays tied to property condition rules, inspections and underwriting.

“Things could get better in the form of lower costs for lending being passed to borrowers, home transactions being sped up, and natural disasters leading to fewer defaults,” he said.

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