FHA is increasing the amount of monthly mortgage insurance  it charges homebuyers on their loans.  Monthly mortgage insurance is a monthly premium that the buyer pays (included in the monthly payment) to insure FHA against default on the loan.  Because so many loans are in default right now, FHA does not have enough money to cover all the losses so they will be charging all the future FHA homebuyers more for insurance.  This insurance will remain on the loan for seven years even if the home increases in value to the point where mortgage insurance would no longer be required (20% equity).

Here’s an example of the difference.  On a $200,000. FHA mortgage, the monthly payment would increase by $43.00.  requiring the buyer to make $141. per month more income to qualify for the loan.  If you are close to making a decision on buying a home with FHA financing, you might want to hurry up.