Government Website Promotes “3% or Less” Down Payment

Here’s a brochure titled “How to Buy a Home With a Low Down Payment: A Consumer’s Guide to Owning a Home with Less Than Three Percent Down,” which was developed by the Mortgage Insurance Companies of America in cooperation with the Extension Service of the U.S. Department of Agriculture, and appears on this government (GSA) website.

“Many people mistakenly believe that you have to come up with a down payment equal to 20 percent of the price of a home. In fact, home loans with down payments of less than 20 percent are becoming increasingly popular. They are called “low down payment mortgages.” This is good news for the millions of home buyers who are finding it difficult to save a large down payment, especially for their first house. More and more borrowers are taking advantage of low down payment mortgages and becoming homeowners with less than less percent down.”

Q: Isn’t that exactly the kind of mortgage lending that helped cause the housing bubble?

HT: Joy Pavelsik

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About Mark J. Perry 262 Articles

Affiliation: University of Michigan

Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.

He holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University in Washington, D.C. and an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota.

Since 1997, Professor Perry has been a member of the Board of Scholars for the Mackinac Center for Public Policy, a nonpartisan research and public policy institute in Michigan.

Visit: Carpe Diem

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