As the U.S. recovers from the effects of the finanicial crisis, regulators have been charged with determining what went wrong and how best to fix the issues to prevent problems in the future.
One of the solutions proposed by regulators is to require home buyers to make a minimum of 20% down payment when purchasing a home. For a $150,000 home, this means that a buyer would need $30,000 in cash at the time of closing in order to qualify for a mortgage.
Proponents of the 20% downpayment policy argue that a higher down payment protects banks from fluctuating market values, and prevents howeowners from “walking away” from mortgages in which they are not able to make the payments. Ultimately, proponents say, the goal is to prevent banks from holding hundreds or thousands of mortgages for properties that are not worth the outstanding value of the loan (as happened in the last recession), and to prevent banks from making risky loans to consumers who cannot afford a home.
Opponents say that the 20% downpayment policy is unreasonable and will not solve the underlying issues that caused the financial crisis. Critics argue that it will take a decade or longer for most home buyers to be able to save the 20% required to purchase a home, and that the 20% requirement will prevent buyers who are otherwise credit-worthy from the opportunity to purchase a home.
Below we have provided several links to articles on this issue from prominent news sources. Also, for those so inclined, we have provided a link to a website that allows the public to send feedback to Congress on this issue.