FHA Proposes 5 Percent Down Payment for Jumbo Loans, Other Changes
January 31, 2013
The FHA has announced several changes that will inflate the cost of mortgages for consumers. The agency confirmed it will raise the down payment requirement to 5 percent from 3.5 percent for jumbo loans above $625,000. It also will increase its annual mortgage insurance premium for most new loans by 10 basis points and hike premiums on jumbo loans above $625,000 by 5 basis points. Additionally, new FHA borrowers will be required to continue to pay annual premiums for the duration of the loan. The FHA, which outlined many of these changes late last year in its annual report to Congress, is facing a projected $16.3 billion shortfall due to defaults on loans at the height of the financial crisis. It says the changes will help improve its finances.
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