Still Too Easy to Buy a Home?

Republicans want to "strengthen FHA" by raising the down payment to 5 percent and making buyers pay their own closing costs.

Legislators are currently discussing a bill proposed by Republicans that will significantly increase the upfront costs of buying a home with an FHA mortgage.

Currently, qualified homebuyers only need a 3.5 percent down payment and they can also finance their closing costs — the bill would increase the down payment to 5 percent and make buyers come up with their closing costs upfront. Closing costs are generally around 3 percent of the purchase price.

For example, currently, a homebuyer in Concord or Clayton, buying a $350,000 home, only has to come up with a $12,250 down payment. If the seller agrees, they can also roll their closing costs into the purchase price of the home. If this legislation passes, a homebuyer would have to come up with a $17,500 down payment plus roughly another $11,000 in closing costs to get into the same house.

The bill met with stiff resistance when it was introduced May 25 during an Insurance, Housing and Community Opportunity Subcommittee hearing. One of the strongest opponents to the bill is The National Association of Realtors (NAR).

The bill would only increase "the number of creditworthy borrowers ineligible for home ownership and does little to reduce risk of default," NAR president Ron Phipps said when he testified during the hearing.

NAR consistently sites studies that say the single biggest obstacle to homeownership for most families is the inability to come up with the down payment and closing costs.

The bill also proposes lowering FHA loan limits an average of more than $50,000 across 612 counties and 40 states, which NAR also vehemently opposes, saying it will threaten the housing market’s currently fragile recovery.

“Allowing the current loan limits to decrease will have an immediate negative impact on mortgage availability. FHA has played a critical role in holding down mortgage rates. Without FHA, the higher mortgage rates paid by consumers would flow into noncompetitive banks that are too big to fail,” Phipps said.

Proponents of the bill say it will strengthen FHA’s finances and protect. A smaller government footprint in housing is a key goal of the Obama administration.

Here are a couple of interesting new listings that hit the Concord and Clayton markets this week:

1159 Rock Creek Way, Concord

4 bedroom,  2 bath,  2228 square feet


This home is located in the Pine Hollow area, a very desirable neighborhood located on the Clayton border surrounded by views of Mt. Diablo and walking distance to good schools. It sits on a .17 acre corner lot and has had many updates including a tile roof, dual pane windows,  cnew arpet and a new water heater. It also features a nicely-landscaped, yet low maintenance front and backyard.

968 Oak Street, Clayton

3 bedroom, 2.5 bath, 1758 square feet


This lovely updated home is LITERALLY located next to dowtown Clayton and its park, restaurants and shops. It's situated on an almost third-acre lot with R/V parking. It's updated throughout with a remodeled kitchen with granite counters and tile floors. There's also a beautiful mastersuite with a walk-in closet. French doors lead to the private, low-maintenance backyard.


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