Across the country, mortgage insurers have been increasing their requirements. They want to see better home mortgage loans that are less likely to default. And FHA loans are joining the fold.

Yesterday, the Federal Housing Administration announced that it would be raising its home mortgage loan insurance premiums to 1.75% from 1.50%. This is a change that is expected to bring more revenue in from FHA loans, especially since the number of loans insured by the FHA is on the rise.

The Wall Street Journal reports on some of the reasoning behind the decision to raise mortgage insurance premiums on FHA loans:

The FHA may well need more income to cope with the payouts it will have
to make to lenders and loan investors in coming years. At a time when
house prices generally are falling, the share of new mortgages insured
by the FHA has soared to 23% in July from a low of 1.8% in 2006,
according to Inside Mortgage Finance, a trade publication. Guy Cecala,
publisher of Inside Mortgage Finance, said the FHA’s share could reach
30% by year end.