According to various news sources, it is no longer a rumor that the Federal Housing Administration (FHA) will increase down-payments on loans to 5 percent.  This increase will have an impact on prospective first-time homebuyers as they have to pay more for their down-payment.

The FHA, which insures mortgages with low down payments, is scrambling to balance its increasingly important role in propping up the housing market with faltering finances of its own that could require a government bailout.

The agency's share of home loans has surged from 3% in 2006 to nearly 30% this year as credit has tightened and borrowers' bank accounts have been depleted. But that increased exposure has led to more defaults, driving the FHA's reserves below their mandated levels.

 

The changes will go into effect in the first half of the year the year and are considered among the most significant steps to address risk in the agency's history.