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Legislation has been introduced to increase the down payment for FHA loans from the current 3.5% to 5% (HR3706).  Rumor has it that this legislation will also restrict the ability to have financed closing costs.

The increased down payment legislation is supported by financial big wigs like Ben Bernanke.  The likely motivation is that increased down payments may mean that a homeowner is less likely to walk away from the home when financial trouble hits. 

And, speaking of financial trouble, such woes have hit the FHA.  Given the losses due to foreclosures, reserves have fallen below the congressional mandated 2%.  In my opinion, this legislation will be an attempt to prevent or reduce the likelihood of of that in the future.  My best guess is that this bill will work it way through congress like a hot knife through butter. 

So, if you are looking to buy with an FHA @ 3 1/2% down--get moving.  It may not be available for long. 

If you have any FHA or other real estate related questions, do not hesitate to ask.  You can email me at johnsonlaw@sbcglobal.net or call me at (714) 863-5485.  -Melinda