FHA Operational Changes Effective Immediately

The Federal Housing Administration (FHA) has recently announced some operational changes, that are scheduled to go into effect in the near future (Spring and Summer 2010). One of the more notable changes to discuss is that a borrower whose credit score is less than 580 will soon be required to have a 10% down-payment instead of the traditional 3% for FHA loans. In example, a borrower with a 513 credit score must pay 10% or $25,000 as a down-payment for a house on sale for $250,000, unlike another borrower with a credit score of 600 requiring at least 3% or $7,500 in down-payments for the same house...

The second operational change for FHA loans is the increase in upfront mortgage insurance premiums from the original rate of 1.75 percent to 2.25 percent.

The changes are implemented to keep the FHA entity afloat; it's a response from the government to seek ways that will keep FHA alive and still grant millions of borrowers the opportunity to live the American dream of owning a house.