We’ve been hearing rumors of legislation which would raise the minimum down-payments to 5% for a while now, but Inman News recently reported that the Republican-backed bill has been drafted and may go before Congress sometime soon.
Naturally, opinions on the bill are divided. Some (Republicans, for the most part) feel that it’s a necessary measure to prevent the kind of debilitating losses that the Federal Housing Administration has shouldered in the recent past (about $15 billion, for the record). The current minimum down-payment for borrowers whose mortgages are insured by the FHA is 3.5%, and that seems not to be working out so well.
Opponents of the bill (mostly Democrats) cite the fact that the bill will put home-ownership out of reach for lower income families and first-time buyers – many of them young people who simply haven’t had a fair chance at accumulating 5% down in savings. Nonetheless, many of these young people are surviving the Recession and are perfectly capable of making mortgage payments. This bill would unnecessarily defer their initiation into home-ownership and therefore further postpone the recovery of housing as a whole.
We’ll keep you posted on further developments.