Stricter Down Payment Proposal Could Deter Homebuyers

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20 percent down paymentAmong the most hotly contested ideas that bank regulators have proposed to reduce the risk of another financial crisis is a rule making a 20 percent down payment mandatory on some new home loans. Consumer advocates, civil rights groups and lending industry groups alike have said that such a rule would deter many families from ever buying a home.

A new survey by the National Foundation for Credit Counseling could shed light on the actual effects of the proposal: The survey found that half of the 1,000 people contacted thought that they would never be able to put together a 20 percent down payment to buy a home.
And the situation that would be created by the proposed rule, introduced by the the Federal Deposit Insurance Corporation in March, might end up being even worse than the survey suggests.

"Since prices for homes are at historic lows, the necessary down payment represents a lower dollar amount than would typically be necessary," Gail Cunningham, a spokesperson for the NFCC, said in a statement. "Nonetheless, consumers still do not feel capable of meeting the requirements."

Read the full story on The Huffington Post.

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