Eliminating downpayment on FHA loans

Eliminating downpayment on FHA loans

On February 3, 2004, Congressman Pat Tiberi (R-OH), Mike Oxley (R-OH), Bob Ney (R-OH) and several other House members from other states, introduced H.R. 3755, the Zero Downpayment Act of 2004. 

This legislation would eliminate down payment requirements for first-time homebuyers seeking federally insured home mortgages. 

FHA loans typically require a minimum down payment of 3 percent.  This bill would implement a proposal made by the Bush Administration and allow FHA to back loans with no down payment required.  Applicants would still have to meet FHA’s underwriting requirements to ensure they could afford the monthly payments.

“Families who qualify for zero down payment mortgages will be charged a modestly higher insurance premium on their home loan,” Tiberi explained.  “For example, on a $100,000 mortgage, a zero down payment borrower will pay approximately $50 a month more than a regular FHA borrower. The higher premium will completely cover the costs of the program, meaning there is no additional cost to the taxpayer.”

At press time, the bill had 16 co-sponsors and was in the House Committee on Financial Services.