The Federal Housing Administration (FHA) has put new rules into effect this month on mortgages that it insures. Although the one-time upfront insurance premium has been cut from 2.25% of the loan amount to just 1%, the annual insurance premium paid monthly by the borrower was almost doubled, from as low as 0.5% of the loan balance to as much as 0.9%. Because FHA borrowers are required to maintain their monthly mortgage insurance for at least five years and until their loan-to-value ratio reaches 78%, the savings up front does little to compensate for the extra paid out over time. Additionally, FHA has set a minimum FICO score for its borrowers at 500, with 10% downpayment required – instead of the normal 3.5% – for borrowers with FICO scores below 580.

Full Story: http://www.nytimes.com/2010/11/28/realestate/mortgages/28Mort.html?_r=2&emc=eta1

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