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FHA mortgages are guaranteed by the US government and offer secure, fixed-rate loans that are ideal for many Florida buyers.

The down payment can be as low as 3.5% of the purchase price, and many closing costs and fees can be included in the loan.  FHA also has "fixer-upper" loans that include the cost of repairs and renovations in the mortgage amount - an ideal situation for someone buying a foreclosure or other distressed property. 

However, some changes have recently been made to their program.  The FHA is raising its up-front mortgage insurance premium to 2.25% from 1.75%, boosting the minimum down payment to 10% for borrowers with a credit score of 580 and below (it stays at 3.5% for everyone else), and reducing permissible seller concessions from 6% to 3%.  The higher up-front mortgage insurance premium won't affect the amount of cash that buyers will need to raise, as that can be financed.  But it will affect how much house they can afford, and could increase their monthly payments by $50 to $100. 

The up-front mortgage insurance premium increase goes into effect April 5.  Proposals to reduce seller concessions and increase the credit score requirements were expected to be posted in the Federal Registry in February.

These changes are in part designed to shore up the FHA's capital reserves and to manage risk, maintaining a healthy FHA, which today commands about 40% of the national mortgage market.  This is an important part of affordable home financing and economic recovery.