Proposed 30% Down Payment
Los Angeles real estate would seriously be affected if a new proposal for mortgage down payments passes. Federal agencies are considering new regulations that would require buyers to have a 30% down payment to qualify for loans.
Under this proposal, a house for sale in Los Angeles listed for 1,000,000 would require a down payment of $300,000.
This proposal could keep first time home buyers out of the market. The Mortgage Bankers Association of America, who is against the proposal, estimates that only 18% of buyers in 2012 would have qualified for loans under this proposal. That means about four out of every five potential buyers last year would have been denied a mortgage.
This proposal is currently under review, and taking public comments until October 30.
If this proposal does go through, it would mean that fewer people would be able to purchase real estate in Los Angeles especially when you consider that the median price of a house for sale in the Hollywood Hills is 2,199,000 . With only one out of five people able to qualify for a loan, Los Angeles homes for sale would only be for the very wealthy.
However, it is unlikely that this will eventually become law. It is interesting to note that this is not the first time such a proposal has come forth. Two years ago, agencies rejected a similar proposal that would have required a 20% down payment for loans.
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