The 20% down debate

graph via The Washington Post

Over the last several months, a huge debate about making 20% down payments mandatory when purchasing a home has been raging in the news, blogosphere and in real estate brokerages across the country. 

If you've been out of the loop, basically the gov has decided to implement a minimum 20% down payment for conventional loans in order to obtain a mortgage at the best interest rates.  If you're using an FHA loan, the minimum down payment will remain 3.5%.

What's the point?  To make sure we never have another financial meltdown like the one we just witnessed.

Personally, I am not in favor of a 20% down payment.  I know I'm biased.  A 20% down payment would impact some of my business. 

On the other hand, DC is expensive.  Coming up with 20% down payment or $80,000 on a 400K property (the *informal* average price of DC property) is a struggle for most buyers.  I have plenty of clients who manage to save 20% down on average salaries and I'm always thrilled for them. 

Furthermore, buying a property these days is rife with hurdles.  Why make it even harder? 

I also don't think obtaining a loan should be easy as it was in the early 2000's.  But lenders are rejecting fantastic loan candidates for the stupidiest reasons.  If it didn't break client confidentiality, I could give you multiple examples. 

Meanwhile, I (and every other realtor in the country) will be watching closely how the issue is resolved.