With the aim to try and cushion the FHA's troubled balance sheet, on Wednesday Commissioner David Stevens announced some major changes at the Government mortgage insurer which is currently responsible for backing about 50% of all home loans across the country's minorities.

The FHA will be hiking the up-front Mortgage Insurance Premium, which is paid by borrowers, from the previous 1.75% to 2.25%, in addition to requesting legislative authority to lift the maximum annual MIP that can be legally charged by the FHA.

This is the second time in a mere 2 years that the interest rate has been hiked by the mortgage insurer.

“Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important”, said Commissioner Stevens.

Also, in order for new borrowers to qualify for the group’s 3.5% down payment program, it will now be essential for them to have a minimum FICO score of 580. Borrowers who have a lower score will be asked for a down payment of at least 10%.

"While borrowers will bear more of the costs of the government insurance program through higher premium charges, the additional revenue will help ensure that FHA stays solvent", said David Berenbaum, Chief Program Officer at the National Community Reinvestment Coalition.