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The new FHA policy changes are designed to shore up the FHA's capital reserves and help the agency do a better job of managing risk.

How will it affect Buyers?

1. The FHA is raising its upfront mortgage insurance premium to 2.25% from 1.75%, which will boost the minimum down payment to 10% for borrowers with a credit score of 580 and below. This will affect first time home buyers who have not had a chance to build up their credit score and for other Buyers where the economy has affected their ability to save money for a down payment.

2. They will also reduce the permissable seller concessions from 6% down to 3%. This will affect the Buyer because these funds were typically used to help pay closing costs such as title insurance and the mortgage origination fee.

The up front mortgage insurance premium increase goes into effect April 5th.