Banks Push Home Buyers To Put Down More Cash

The down payments demanded by banks of homebuyers have ballooned since the housing bust, forcing many people to rethink what they can afford and potentially shrinking the pool of eligible buyers, the Wall Street Journal reported today. Last week, the Obama administration called for gradually raising down payments to a minimum of 10 percent on conventional loans, meaning those that can be bought or guaranteed by mortgage giants Fannie Mae and Freddie Mac. The median down payment in nine major U.S. cities rose to 22 percent last year on properties purchased through conventional mortgages. FHA-backed mortgages, which require 3.5 percent up front, made up about half of loans for home purchases last year, according to housing-research firm Zelman & Associates, but borrowers often pay higher interest rates and must pay private mortgage insurance, often driving their monthly payments higher.


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