Buyers needing FHA mortgages will pay higher fees

The New York Times reports that the FHA will charge higher fees to buyers seeking mortgages, to restore depleted reserves. In the current environment, many buyers have been seeking FHA mortgages (40% of all new mortgages in 2010). The FHA does not make loans; it only insures them. But its underwriting standards allowed people with a credit score of 580 or more to put down as little as 3.5 % of the purchase price, according to the article.

For those who have better credit or who can put more money down, a conventional loan may be better. But for many, FHA loans are the best game in town.

The increase in fees will be .1 % to .35 % of the loan amount with additional charges planned in the future.

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