FHA Changes Could Make it Harder to Get a Loan

The Federal Housing Administration is bleeding cash -- and that could make it harder for borrowers to get FHA-backed loans, which have been a refuge for borrowers and lenders alike in the downturn. The FHA is supposed to hold a cash reserve of 2 percent, but it fell to just 0.5 percent in the last quarter because of foreclosures and delinquent payers. To raise more funds, the FHA is tightening its requirements. The result is that borrowers will likely need more up front cash, have a harder time qualifying for FHA-backed loans, and will find fewer lenders to choose from.

Following are some changes announced at a Congressional hearing on Wednesday: