Fewer first-time home buyers are obtaining mortgages with down payments of 6 percent or less, according to the National Association of REALTORS®’ latest Confidence Index Survey.
In February, 61 percent of REALTORS® reported that their first-time buyers had obtained mortgages with 6 percent down or less compared to 74 percent of REALTORS® reporting the same in 2009. “Along with the re-emergence of private mortgage insurance since 2011, REALTORS® have reported several factors driving this trend: tight competition for available properties, stricter underwriting standards, the higher cost of mortgage insurance at the [Federal Housing Administration], as well as a reduction in the high-cost loan limits at which FHA can finance,” according to NAR’s Economists’ Outlook blog. “With demand still stronger than supply across many states, a higher down payment enhances the likelihood of winning the bid and of obtaining a loan from the bank.”
Source: “Fewer First-time Buyers Obtaining Mortgages with Low Down Payment,” NAR Economists’ Blog (March 31, 2014)