FHA to Toughen Down Payment Requirements and Increase Up-Front Mortgage Insurance
The Federal Housing Administration (FHA) is raising the minimum down payment for borrowers with credit scores below 580. Any borrower with a score lower than 580 will be required to make at least a 10% down payment, compared with the current 3.5% requirement. The intent is to shore up the FHA’s finances.
The FHA will also increase up-front mortgage insurance premium (UFMIP) from 1.75% to 2.25%. Also being discussed is raising the monthly mortgage insurance premium from 0.55% to a higher amount. Pending approval by Congress, get ready for higher private mortgage insurance.
Update: the increased UFMIP is increasing effective April 5, 2010.
