The FHA is losing money.  In fact almost 10% of the loans are delinquent.  So, in an effort to preserve the integrity of the organization, they are tightening guidelines.  This means, higher credit scores, higher down payments, higher mortgage insurance premiums, and tighter underwriting guidelines and ratios.   SO, if you want to buy a home in the Twin Cities you better hurry.  We broker FHA loans in Minnesota and have lenders who are flexible.  Once the changes go into affect, we will be having to adjust to the new standards.  While I understand that the FHA is trying to protect themselves with tighter guidelines, they may be making things worse.  Fewer buyers will mean fewer home sales-which will mean softer prices and possibly more defaults.  And so it goes.

Here is the HUD news release:

http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-016