20% Down Payment

Having 20% downpayment towards a home purchase is the ideal amount for financed loans, even 25% can be preferable for jumbo loans. Up to this point that percentage has been seen as ideal not mandatory, depending on other circumstances.

There had been calls to make the 20% a regulation for borrowers to get access to the best value mortgages. Now it looks like these regulations are less likely to pass.

The Washington Post reports.

But the three co-sponsors of the provision say Congress expressly omitted any reference to down payments and never intended for the agencies to set an equity minimum that would prevent up to 40 percent of buyers from qualifying for a low-interest mortgage.

In testimony Sept. 8 before a House Financial Services subcommittee, Sen. Johnny Isakson (R-Ga.), one of the co-sponsors, said: “If this rule goes into effect as proposed, it will be the last nail in the coffin for the already crippled U.S. housing market. . . . Poor underwriting led us into the housing crisis, not down payments.”

Full Story here.


Just from working with buyers the full 20% is not possible for many in this current market, even with home prices at more reasonable levels.