Federal Housing Administration To Make It Tougher To Get A Home Loan

The days of "just sign here and worry about payment later" may have really ended in the home mortgage market. The Washington Post reports here that the Federal Housing Administration is proposing to toughen rules for home-loan borrowing in two key ways: demanding more up-front money and higher credit scores. As the Post explains:

The Federal Housing Administration is proposing to increase the up-front cash paid by borrowers as part of an effort to shore up the agency's finances, which have been staggered by rising defaults in its flagship mortgage insurance program, according to FHA officials.

The changes also include raising minimum credit scores for borrowers who receive FHA-backed mortgages and limiting the amount of money sellers can kick in, including paying closing costs or giving free upgrades.

Currently, the FHA backs about 30% of initial home loans and 20% of refinancings.