According to the Washington Post last week, because FHA loans have become more popular and they now account for approximately 30% of all loans up from 3% in 2006, the agency is making some changes to their lending standards to protect itself against risk.

Some of the changes include:

1) Upfront Insurance Premium is going up from 1.75% of the loan value to 2.75%: this fee charged to FHA borrowers for utilizing the program.  The fee can be financed into the loan or paid up front at closing.

2) No more Condo Spot Approval: condo buildings must be FHA approved for you to be able to get an FHA loan to purchase a unit in the building.  For a time they would “spot approve” a condo for purchase by allowing the condo’s management to answer a questionnaire proving that they meet the FHA’s conditions for approval.  Condo buyers must now only use an FHA loan for an already approved community.

3) Seller Concessions Reduced from 6% of the purchase price to 3% of the purchase price.  For example, if you are purchasing a $500,000 house, the seller can provide a subsidy (money provided to the buyer by the seller at closing, intended to defray the buyers closing costs) of no more than $15,000.

4) Credit Score: Minimum score of 500 required and buyers with less than a 580 may be required to put down 10% as opposed to the more common 3.5%

There are other changes, so make sure to keep your eyes out and talk to your lender about details.