chicago-condos & Chicago Real Estate & Chicago Mortgage pcherry on 07 May 2010 10:10 pm

Congress Considers Raising Minimum Down Payment Required

May 7, 2010 - Even though right now just about the only way you can get a mortgage with a low down payment is if it is backed by FHA. A rapidly increasing number of buyers, especially first-time buyers, count on the 3.5% down payment that an FHA backed loan can have. There have been the rare occasions when a buyer could find another private lender offering a down payment of less than 5%, but those days may soon be over.

According to a report in the Wall Street Journal, some members of Congress are pushing to pass a law mandating that all private lenders require at least a 5% down payment from borrowers. The FHA and any other government agancy would be exempt from this new law if it passes.

The article also went on to state that the National Association of Realtors isn’t in favor of this proposed legislation. The NAR claims that around 11% of all home buyers as well as about 18% of all first-time home buyers locked in down payments that were 5% or less this past year and that passing this law could potentially knock some buyers out of the market.

FHA loans have certainly enabled many buyers to own a Chicago condo, but giving only that agency the right to offer the lowest down payments could hurt sales of Chicago real estate in the long run.

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