FHA has announced that they are introducing a series of significant changes to their guidelines. These changes include an increase in the cost of FHA mortgage insurance which is required on all FHA mortgages. The upfront mortgage insurance will be raised from 1.75% to 2.25% effective with applications taken on April 5. FHA is also asking Congress to give it the authority to raise monthly premiums as well. In addition, FHA indicated that those with a credit score below 580 will have to have a 10% down payment to obtain an FHA loan. Those with a higher score will still be eligible to purchase with a 3.5% downpayment. Finally, FHA also indicated that they will be lowering the amount that the seller will be allowed to contribute to the buyer’s closing costs from 6.0% of the sales price to 3.0% of the sales price. These changes are being effective because the reserves of the FHA insurance fund have fallen below the level required by Congress. Therefore, FHA is taking actions to shore up this fund by tightening underwriting requirements.