On a $300,000 loan, the new upfront premium works out to $5,250, up from $4,500. The annual premiums paid by borrowers would remain at 0.50% to 0.55% of the loan balance.

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.

The FHA is taking a far bigger share of the market because investors last year began shying away from buying mortgage securities that don't have backing from a federal agency or government-sponsored mortgage investors Fannie Mae and Freddie Mac. More recently, Fannie and Freddie have become more cautious about buying or guaranteeing mortgages because heavy losses have depleted their capital. Borrowers can get FHA-insured loans with down payments as small as about 3%.

The FHA had assets of $19 billion in its reserves for single-family mortgages as of June 30. Some analysts have warned that the agency might need to ask Congress for money to rebuild its reserves if defaults continue to rise. Congress has given the FHA a prime role in backing new, more affordable loans for people who are struggling with their current mortgages. Those refinances are likely to be risky because borrowers who are rescued once often fall behind again later

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By JAMES R. HAGERT