The 20% Down Debate

  • Jen Angotti
  • 04/20/11
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 newsblogosphere 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.
 
 

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Jen Angotti excels at helping buyers and sellers achieve their real estate dreams. She offers concise, realistic advice on how to navigate any real estate transaction. Her clients appreciate her attention to detail, willingness to answer questions and patience.

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