One of the consequences of the 2008 housing crisis was the imposition of new rules on home buyers, one of which requires buyers to have a 20% down payment to qualify for a mortgage loan. Formerly, buyers only needed a 10% down payment. A buyer can still qualify for a loan with a 10% down payment if mortgage insurance is purchased with the loan. Mortgage insurance is an insurance policy that protects a lender if the borrower defaults on payments, passes away or is otherwise unable to meet the contractual obligations of the mortgage. Some lenders will waive this insurance requirement when the home appreciates in value or when the loan principal decreases. Other lenders do not. Mortgage insurance often costs several hundred dollars a month – a significant amount over the term of the loan.
Proposed Legislation: H.R.3141 - FHA Loan Affordability Act of 2019
Prospective Sponsor: Rep. Dean Phillips (MN)
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