Industry NewsMortgage

FHA hiking premiums this spring

3.5% minimum downpayment stays in place for most borrowers

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The Federal Housing Administration won't raise the 3.5 percent minimum downpayment requirement for mortgages it guarantees as long as borrowers have FICO scores of 580 or better.Beginning early this summer, however, borrowers with credit scores below 580 will be required to make downpayments of at least 10 percent in order to participate in FHA's mortgage insurance program.This spring, the Obama administration also plans to raise the upfront mortgage insurance premiums paid by all FHA borrowers to 2.25 percent, up from 1.75 percent now.The increase -- some of which may later be shifted to annual premium payments -- will help build FHA capital reserves back to statutory minimums and bring back private lending, FHA Commissioner David Stevens said today.Stevens also said enforcement of FHA lenders will be stepped up, and that allowable seller concessions will be reduced from 6 percent to 3 percent early this summer. The current 6 percent level exposes FHA to excess risk by creating incent...