Many people rely on FHA loans in order to qualify to buy a home. FHA is planning changes to their home loan program scheduled to take effect this spring, 2010. These changes are being made in order to strengthen FHA's insurance program. FHA's insurance program guarantees FHA lender's against losses that are default related. Anyone who is planning on purchasing a home should be aware of these changes that coming. It can directly affect many people who are looking to purchase a home through FHA.

Here are some of the changes that are scheduled to take place in the spring of this year:

-Currently, the FHA mortgage insurance premium is 1.75%. This is being raised .50% to 2.25%. It is the home owner who pays this mortgage insurance premium.

-The down payment requirement for FHA loans is changing. A credit score of at least 580 will be required in order to make a 3% to 5% down payment. Any credit score below 580 will require a down payment of at least 10%. This is a very big change for FHA loans and may put many people out of the playing field. It was the low down payment that drew many people to acquire FHA loans.

-Currently, allowable seller concessions are 6%. FHA is changing allowable seller concessions to 3%. This is another big change for anyone trying to purchase a home. Allowable seller concessions are a percentage of the purchase price that the seller is allowed and agrees to contribute to the buyer towards closing costs. This change means more costs going to the buyer.

-FHA will be pursuing legislation to make FHA lenders accountable. Lenders will be required to assume liabilities for all of the loans that they underwrite. They will be held liable and more accountable for the loans they write.

-FHA will also be pursuing legislation to review FHA lenders. This would allow FHA to terminate a nationwide lender's origination and underwriting approval based on review and performance of regional branches.

Although these changes are being made in order to strengthen FHA's financial position and make the lender's more accountable for their actions, these changes will also have an impact on anyone who is seeking an FHA loan in order to purchase a home. Anyone who is planning on purchase a home through an FHA loan in the spring, should start cleaning up their credit now in order to avoid a 10% down payment in a few months.