FHA Drops Zero-Down Proposal

The Department of Housing and Urban Development will not seek a zero-downpayment option as part of its Federal Housing Administration reform package, HUD Secretary Alphonso Jackson has told a congressional panel."We will remove from the legislation the zero downpayment," Secretary Jackson told House appropriators. The HUD secretary noted that there is resistance in the Senate to the zero-down option, and he has agreed to maintain a minimum downpayment. "Whether it is 1% down or 2% down, there should be something paid down to give the people incentives to make sure they understand what it takes to be a homeowner," Mr. Jackson said. The FHA now has a 3% downpayment requirement, and it wants the flexibility to adjust the downpayment along with mortgage insurance premiums based on the borrower's credit profile and resources.