There’s a significant divide between those at the Federal Housing Administration (FHA) and its critics over how the FHA can improve their fiscal situation and the housing market as a whole.

To balance both their struggles and success in the market, the FHA announced “a set of policy changes” back in January that were designed to both strengthen their shaky capital reserves, and to enable the administration to aid in housing’s recovery. For the most part, the changes amounted to an increase in the up-front mortgage insurance premium (MIP).

“Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important,” said Commissioner [David] Stevens.

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As part of the housing rescue bill passed this summer, the Federal Housing Administration is set to institute new regulations come October 1. The FHA will raise their minimum down payment amount to 3.5%, up from 3%. Buyers will no longer be able to seek down-payment assistance from the seller or non-profit organizations.

The FHA is also planning on increasing their fees beginning October 1. Buyers will now have to pay an upfront mortgage insurance premium of 1.75% on their loan amount instead of 1.5%, as well as annual premiums of .55%, up from .50%.

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Hello higher upfront mortgage insurance premiums on all FHA single-family loans beginning October 1. Despite the president’s support for risked-based pricing (RBP), the recent version of the housing rescue bill signed into law did away with RBP because opponents argued that the government was essentially charging the highest premiums to the poorest and weakest borrowers.

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