Tampa FHA home loan borrowers may want to act quickly in order to avoid a potential downpayment increase from 3.5% to 5%. It’s not the first time we’ve seen an increase of this type, and it’s not going to be the last.
Just this pas year, the downpayment requirement for Tampa mortgage borrowers – and those across the country – was increased from 3% to 3.5%. Signs point to congress moving to bump up the percentage again – but by more this time around.
A post by Steve Lines, an Arizona FHA Mortgage Specialist on this blog, provided some great info on what’s happening with this increase from a Congressional standpoint.
On October 1st, Rep. Scott Garrett (R-NJ) introduced a the ‘FHA Taxpayer Protection Act of 2009’, that if passed, would increase the minimum down payment requirement for FHA loans to 5%. Why has this bill been introduced? Here’s Garret’s take:
“Homeownership is a noble goal,” Garrett said. “However, the benefits of promoting homeownership using government subsidies must be balanced against the potential risk of insuring less creditworthy borrowers and exposing the American taxpayer to that risk.
As we have learned repeatedly throughout the mortgage crisis, the amount of equity a homeowner has in their home directly correlates to the credit risk associated to their mortgage.
In trying to find a reasonable balance between the current, extraordinarily low level and a level that would ensure a significant reduction of risk to the taxpayer, I am introducing legislation to increase the FHA down payment requirement to 5%.”
Mr. David Steven, the FHA Commissioner, responded with concern regarding the increase, stating that:
“If it weren’t for this program, assuming that risk is being protected, this would forestall recovery of key metropolitan markets across the nation… When I see members of Congress move a bill out that says raise it to 5%…I get very concerned… It isn’t the down payment on its own that causes a default.”
Bottom line is this: taxpayers are becoming increasingly concerned at the level at which the government is still subsidizing home loans, and this concern is reaching the ears of Congressional members.
FHA mortgages in Tampa and across the US still represent a huge part of the mortgage market. Even if Representative Garrett’s bill fails to pass, it is likely that there will be further attempts to tighten FHA’s qualification guidelines.
If you or anyone you know is planning on using a Tampa FHA mortgage to purchase or refinance a home, consider acting sooner than later so as to be sure and take advantage of the 3.5% down payment requirement while it lasts.
