Zero Downpayment FHA Mortgage Bill Introduced
February 5, 2004
Legislation Worul Creates Greater Opportunities for First-time Homebuyers
House Financial Services Committee member Rep. Pat Tiberi (OH) yesterday introduced H.R. 3755, bipartisan legislation that would eliminate the down-payment requirement for families and individuals who buy homes with FHA-insured mortgages.
The Zero Down Payment Act of 2004 would be available for first-time homebuyers who meet FHA's underwriting requirements and who could easily afford monthly mortgage payments. Original co-sponsors of the bill include House Financial Services Committee Chairman Michael G. Oxley (OH), Housing and Community Opportunity Subcommittee Chairman Robert W. Ney (OH), Rep. Peter King (NY), Rep. Rick Renzi (AZ), Rep. Mark Green (WI), Rep. Mike Turner (OH), Rep. Ken Lucas (KY), Rep. William Lacy Clay (MO), and Rep. David Scott (GA).
"Offering FHA mortgages with no down payment will unlock the door to homeownership for hundreds of thousands of American families, particularly minorities," said Rep. Tiberi. ?Those who can afford the monthly payment, but have been unable to save for a down payment, should not be deprived of homeownership.?
As part of the Bush Administration's mission to remove obstacles to homeownership, the FHA mortgages would be provided to families who do not hold enough savings for down payments. According to projections by the Department of Housing and Urban Development, about 150,000 households would qualify for the new loan in the first year alone.
?During the enactment of the American Dream Downpayment Act last year, we learned that the biggest obstacle to homeownership for most families is the inability to come up with enough cash to meet down payment and closing costs,?said Rep. Ney. ?Minority families in particular are burdened by high down payment requirements.?
Families that qualify for the zero down payment mortgages would be charged a modestly higher insurance premium on their home loans. For example, on a $100,000 mortgage, a zero-down-payment borrower would pay approximately $50 a month more than a regular FHA borrower. The slightly higher premium would completely cover the costs of the program, meaning there would be no cost to taxpayers.
?The housing market is experiencing record growth, and Rep. Tiberi's initiative will put more Americans on the path to homeownership, keeping the market strong while allowing buyers to continue to take advantage of favorable financing conditions.,? said Chairman Oxley. ?This legislation will be a top priority for the Housing Subcommittee this year.?
Rep. Tiberi's legislation complements the recently enacted American Dream Downpayment Act, which gives down-payment assistance to 40,000 Americans annually. The legislation was signed by President Bush on December 16, 2003.
Source: House Financial Services Committee